Exhibit 99.1
ATG Reports Third Quarter 2007 Results
Revenue Increased 65% Year-Over-Year; Cash Flow from Operations
Increased 400% Year-Over-Year; Company Raises Annual Revenue Guidance
CAMBRIDGE, Mass.--(BUSINESS WIRE)--Oct. 23, 2007--Art Technology
Group, Inc. (NASDAQ: ARTG), the leading e-commerce platform provider,
today reported financial results for the third quarter ended September
30, 2007.
Revenue for the third quarter of 2007 grew to $35.9 million, a 65
percent increase over third quarter 2006 revenue of $21.8 million.
Cash flow from operations for the third quarter of 2007 was $7.5
million, a 400 percent increase over third quarter 2006 cash flow from
operations of $1.5 million.
"We are extremely pleased with our third quarter results," stated
Bob Burke, ATG's president and CEO. "Based on our solid pipeline and
market research by industry analysts, we continue to believe companies
are in the early stages of reinvestment in e-commerce solutions.
Companies want more control and customization over their online
storefronts, including the ability to offer a consistent multi-channel
experience for their consumers, and ATG's product suite addresses
these needs."
As previously communicated, an increasing amount of ATG's 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 eStara and OnDemand.
Product license revenue recognized in accordance with United
States Generally Accepted Accounting Principles (GAAP) during the
third quarter of 2007 was $7.9 million, compared to $4.8 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 96 percent year
over year to $9.4 million for the quarter from $4.8 million in the
year ago quarter. Approximately 22 percent or $2.1 million of product
license bookings in the third quarter of 2007 will be recognized
ratably.
Net loss in accordance with GAAP for the third quarter of 2007 was
$760 thousand, or $(0.01) per share. This compares with a net loss of
$285 thousand, or $(0.00) per share, in the third quarter of 2006.
Non-GAAP net income was $3.1 million for the third quarter of
2007, or $0.02 per diluted share compared with non-GAAP net income of
$1.3 million, or $0.01 per diluted share for the third quarter of
2006.
At the end of the third quarter 2007, ATG had $49.0 million in
cash, cash equivalents, and marketable securities.
This past quarter, seven new customers purchased ATG commerce
solutions and the number of customers that deployed eStara solutions
increased by 45. New and repeat business was generated from customers
including American Airlines, Boeing, Christian Dior, Deluxe, Philips,
Restoration Hardware, Trade India, Thomas Cook, uPromise, and
Vodafone.
Julie Bradley, ATG's senior vice president and CFO stated, "ATG
continues to effectively execute its business model transition. For
the first nine months of 2007, product license bookings grew 38
percent, service revenue grew 57 percent and cash flow from operations
grew 261 percent, exceeding our expectations. As a result, we are
raising revenue guidance, and look forward to a strong finish to
2007."
Financial Guidance and Business Outlook
Revenue for 2007 is expected to be in the range of $130 million to
$133 million. GAAP net income for the year ending December 31, 2007 is
expected to be in the range of a net loss of $5.0 million to a net
loss of $7.0 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 eStara acquisition related
compensation expense of $1.4 million. Cash flow from operations for
2007 is expected to be in the range of $24.0 million to $25.0 million.
Quarterly Conference Call
ATG management will discuss the company's third 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. 18765842. 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)
September 30, June 30, December 31,
2007 2007 2006
------------- -------- -------------
ASSETS
Current Assets:
Cash, cash equivalents and
marketable securities $ 48,996 $ 41,197 $ 31,223
Accounts receivable, net 32,455 34,561 34,554
Term receivables, current 694 807 55
Prepaid expenses and other
current assets 4,195 3,695 2,446
------------- -------- -------------
Total current assets 86,340 80,260 68,278
Property and equipment, net 6,367 6,368 5,326
Intangible assets, net 12,335 13,561 16,013
Other assets 3,278 2,436 1,036
Goodwill 59,980 59,358 59,328
------------- -------- -------------
Total long-term assets 81,960 81,723 81,703
Total assets $168,300 $161,983 $ 149,981
============= ======== =============
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Accounts payable $ 2,811 $ 4,259 $ 2,607
Accrued expenses 18,351 14,283 15,791
Deferred revenue, current
portion 34,719 34,902 23,708
Accrued restructuring, current
portion 889 1,050 1,213
Capital lease obligations 4 21 56
------------- -------- -------------
Total current liabilities 56,774 54,515 43,375
Accrued restructuring, less
current portion 380 578 1,031
Long-term deferred revenue 7,154 4,745 501
------- ------- ------------
Total long-term liabilities 7,534 5,323 1,532
Stockholders' equity 103,992 102,145 105,074
Total liabilities and
stockholders' equity $168,300 $161,983 $ 149,981
============= ======== =============
ART TECHNOLOGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(UNAUDITED)
Three months ended
-----------------------------
September June 30, September
30, 30,
2007 2007 2006
--------- --------- ---------
Revenue:
Product licenses $ 7,873 $ 6,515 $ 4,774
Services 28,013 26,101 17,066
--------- --------- ---------
Total revenue 35,886 32,616 21,840
Cost of Revenue:
Product licenses 557 549 406
Services 13,752 12,550 7,261
--------- --------- ---------
Total cost of revenue 14,309 13,099 7,667
--------- --------- ---------
Gross Profit 21,577 19,517 14,173
Operating Expenses:
Research and development 6,294 5,948 5,286
Sales and marketing 12,035 12,095 6,580
General and administrative 4,489 4,648 3,327
Restructuring charge (benefit) 9 - -
--------- --------- ---------
Total operating expenses 22,827 22,691 15,193
--------- --------- ---------
Income (loss) from operations (1,250) (3,174) (1,020)
Interest and other income, net 575 521 735
--------- --------- ---------
Income (loss) before provision for
income taxes (675) (2,653) (285)
Provision for income taxes 85 95 -
--------- --------- ---------
Net income (loss) $ (760) $ (2,748) $ (285)
========= ========= =========
Basic net income (loss) per share $ (0.01) $ (0.02) $ (0.00)
========= ========= =========
Diluted net income (loss) per share $ (0.01) $ (0.02) $ (0.00)
========= ========= =========
Basic weighted average common shares
outstanding 127,461 127,388 111,868
======================================= ========= ========= =========
Diluted weighted average common shares
outstanding 127,461 127,388 111,868
======================================= ========= ========= =========
Nine months ended
------------------
September 30,
2007 2006
--------- --------
Revenue:
Product licenses $ 20,997 $ 21,996
Services 76,737 49,029
--------- --------
Total revenue 97,734 71,025
Cost of Revenue:
Product licenses 1,646 1,422
Services 37,043 20,829
--------- --------
Total cost of revenue 38,689 22,251
--------- --------
Gross Profit 59,045 48,774
Operating Expenses:
Research and development 17,627 15,232
Sales and marketing 34,070 21,397
General and administrative 13,740 8,751
Restructuring charge (benefit) (59) 323
--------- --------
Total operating expenses 65,378 45,703
--------- --------
Income (loss) from operations (6,333) 3,071
Interest and other income, net 1,544 1,560
--------- --------
Income (loss) before provision for income taxes (4,789) 4,631
Provision for income taxes 180 -
--------- --------
Net income (loss) $ (4,969) $ 4,631
========= ========
Basic net income (loss) per share $ (0.04) $ 0.04
========= ========
Diluted net income (loss) per share $ (0.04) $ 0.04
========= ========
Basic weighted average common shares outstanding 127,349 111,441
=================================================== ========= ========
Diluted weighted average common shares outstanding 127,349 116,540
=================================================== ========= ========
Art Technology Group, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(UNAUDITED)
Three months ended
-------------------------------------
September 30, June 30, September 30,
2007 2007 2006
------------- -------- -------------
Cash Flows from Operating
Activities:
Net income (loss) $ (760) $ (2,748) $ (285)
Adjustments to reconcile net
income (loss) to net cash
provided by operating
activities:
Depreciation and amortization 1,981 1,925 1,181
Non-cash stock-based
compensation expense 1,589 1,441 1,033
Net changes in operating
assets and liabilities 4,689 5,832 (478)
------- --------- -------------
Net cash provided by operating
activities 7,499 6,450 1,451
Cash Flows from Investing
Activities:
Purchases of marketable
securities (3,604) (3,931) (5,188)
Maturities of marketable
securities 4,675 5,300 3,300
Purchases of property and
equipment (701) (1,023) (2,109)
Payment of acquisition costs - (36) -
(Increase) / decrease in other
assets - (31) (464)
------- --------- -------
Net cash (used in) provided by
in investing activities 370 279 (4,461)
Cash Flows from Financing
Activities:
Proceeds from exercise of stock
options 576 413 268
Proceeds from employee stock
purchase plan 213 234 154
Repurchase of common stock - (2,190) -
Principal payments on notes
payable - - -
Payments on capital leases (17) (18) (24)
------------- --------- -------------
Net cash provided by (used in)
financing activities 772 (1,561) 398
Effect of foreign exchange rate
changes on cash and cash
equivalents 229 (70) (84)
Net increase (decrease) in cash
and cash equivalents 8,870 5,098 (2,696)
Cash and cash equivalents,
beginning of period 32,226 27,128 28,683
------------- --------- -------------
Cash and cash equivalents, end
of period $41,096 $ 32,226 25,987
============= ========= =============
Nine Months Ended
---------------------------
September 30, September 30,
2007 2006
------------- -------------
Cash Flows from Operating Activities:
Net income (loss) $(4,969) $ 4,631
Adjustments to reconcile net income
(loss) to net cash provided by operating
activities:
Depreciation and amortization 5,760 3,236
Non-cash stock-based compensation expense 4,114 2,532
Net changes in operating assets and
liabilities 17,121 (4,343)
------- --------
Net cash provided by operating activities 22,026 6,056
Cash Flows from Investing Activities:
Purchases of marketable securities (9,213) (12,277)
Maturities of marketable securities 14,625 11,176
Purchases of property and equipment (3,123) (3,851)
Payment of acquisition costs (829) -
(Increase) / decrease in other assets (22) (615)
------- --------
Net cash (used in) provided by in
investing activities 1,438 (5,567)
Cash Flows from Financing Activities:
Proceeds from exercise of stock options 1,223 1,327
Proceeds from employee stock purchase plan 649 465
Repurchase of common stock (2,190) -
Principal payments on notes payable - (198)
Payments on capital leases (52) (53)
------------- -------------
Net cash provided by (used in) financing
activities (370) 1,541
Effect of foreign exchange rate changes on
cash and cash equivalents 91 (103)
Net increase (decrease) in cash and cash
equivalents 23,185 1,927
Cash and cash equivalents, beginning of
period 17,911 24,060
------------- -------------
Cash and cash equivalents, end of period $41,096 $ 25,987
============= =============
ART TECHNOLOGY GROUP, INC.
STATEMENTS OF OPERATIONS DATA
(In thousands)
(UNAUDITED)
Three months ended
------------------------------------
September 30, June 30, September 30,
2007 2007 2006
------------- -------- -------------
Equity-Related Compensation:
Cost of revenue $ 274 $ 274 $ 213
Research and development 310 312 310
Sales and marketing 456 370 201
General and administrative 549 485 309
------------- -------- -------------
Total equity-related
compensation $1,589 $1,441 $1,033
============= ======== =============
eStara Earn-out:
Cost of revenue $ 31 $ - $ -
Research and development 360 - -
Sales and marketing 427 - -
General and administrative 214 - -
------------- -------- -------------
$1,032 $ - $ -
============= ======== =============
Depreciation and Amortization:
Depreciation
Cost of revenue $ 370 $ 335 $ 242
Research and development 181 178 164
Sales and marketing 130 128 84
General and administrative 75 58 178
------------- -------- -------------
$ 756 $ 699 $ 668
------------- -------- -------------
Amortization
Cost of revenue $ 504 $ 504 $ 203
Research and development - - -
Sales and marketing 694 694 278
General and administrative 27 28 33
------------- -------- -------------
$1,225 $1,226 $ 514
------------- -------- -------------
Total depreciation and
amortization $1,981 $1,925 $1,182
============= ======== =============
Capital Expenditures:
Purchases of property and
equipment $ 701 $1,023 $2,109
Nine months ended
----------------------------------
September 30,
2007 2006
----------------- ----------------
Equity-Related Compensation:
Cost of revenue $ 748 $ 568
Research and development 855 697
Sales and marketing 1,165 630
General and administrative 1,346 637
----------------- ----------------
Total equity-related compensation $ 4,114 $ 2,532
================= ================
eStara Earn-out:
Cost of revenue $ 31 $ -
Research and development 360 -
Sales and marketing 427 -
General and administrative 214 -
----------------- ----------------
$ 1,032 $ -
================= ================
Depreciation and Amortization:
Depreciation
Cost of revenue $ 1,024 $ 673
Research and development 515 480
Sales and marketing 369 248
General and administrative 175 295
----------------- ----------------
$ 2,083 $ 1,696
----------------- ----------------
Amortization
Cost of revenue 1,512 611
Research and development - -
Sales and marketing 2,082 830
General and administrative 83 99
----------------- ----------------
$ 3,677 $ 1,540
----------------- ----------------
Total depreciation and amortization $ 5,760 $ 3,236
================= ================
Capital Expenditures:
Purchases of property and
equipment $ 3,123 $ 3,851
RECONCILIATION OF GAAP TO NON-GAAP STATEMENT OF OPERATIONS DATA
(In thousands)
(UNAUDITED)
Three months ended,
-------------------------------------
September 30, June 30, September 30,
2007 2007 2006
------------- --------- -------------
Net income (loss) GAAP $ (760) $ (2,748) $ (285)
Amortization of acquired
intangibles 1,225 1,226 514
Net restructuring 9 - -
Equity-related compensation 1,589 1,441 1,033
eStara earn-out 1,032 - -
------------- --------- -------------
Net income (loss) (non-GAAP) $ 3,095 $ (81) $ 1,262
============= ========= =============
Net income (loss) (non-GAAP)
per share:
Basic $ 0.02 $ (0.00) $ 0.01
============= ========= =============
Diluted $ 0.02 $ (0.00) $ 0.01
============= ========= =============
Shares used in per share
calculations:
Basic 127,461 127,388 111,868
============= ========= =============
Diluted 133,079 127,388 116,675
============= ========= =============
Nine months ended
---------------------------
September 30, September 30,
2007 2006
------------- -------------
Net income (loss) GAAP $ (4,969) $ 4,631
Amortization of acquired intangibles 3,677 1,540
Net restructuring (59) 323
Equity-related compensation 4,114 2,532
eStara earn-out 1,032 -
------------- -------------
Net income (loss) (non-GAAP) $ 3,795 $ 9,026
============= =============
Net income (loss) (non-GAAP) per share:
Basic $ 0.03 $ 0.08
============= =============
Diluted $ 0.03 $ 0.08
============= =============
Shares used in per share calculations:
Basic 127,349 111,441
======== =======
Diluted 131,576 116,540
======== =======
Reconciliation of Product Licensing Deferred
(In thousands)
(UNAUDITED)
Three months ended,
------------------------------------
September 30, June 30, September 30,
2007 2007 2006
------------- -------- -------------
Product license revenue $7,873 $ 6,515 $4,774
Increase in product license
deferred revenue 2,146 6,027 -
Product license deferred revenue
recognized (645) (376) -
------------- -------- -------------
Product license bookings $9,374 $12,166 $4,774
============= ======== =============
Nine months
ended
----------------
September 30,
2007 2006
-------- -------
Product license revenue $20,997 $21,996
Increase in product license deferred revenue 10,495 -
Product license deferred revenue recognized (1,135) -
-------- -------
Product license bookings $30,357 $21,996
======== =======
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, 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 June 30, 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