Year-Over-Year, Revenue Increased 29%, Product License Bookings
Increased 29%, and Company Raises Annual Product License Bookings
Guidance
CAMBRIDGE, Mass.--(BUSINESS WIRE)--July 24, 2008--Art Technology
Group, Inc. (NASDAQ: ARTG), the leading e-commerce solutions provider,
today reported financial results for the second quarter ended June 30,
2008.
Revenue for the second quarter of 2008 grew to $41.9 million, a
29% increase over second quarter 2007 revenue of $32.6 million.
"ATG delivered another strong quarter of revenue and bookings
growth," stated Bob Burke, ATG's president and CEO. "We continue to
see robust demand for our e-commerce solutions across a wide variety
of industries."
Product license revenue recognized in accordance with United
States Generally Accepted Accounting Principles (GAAP) during the
second quarter of 2008 was $12.3 million, compared to $6.5 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 29%
year-over-year to $15.7 million for the second quarter from $12.2
million in the year ago quarter. Approximately 62% of product license
bookings in the second quarter were deferred and will be recognized
ratably.
Short and long term deferred revenue grew to $54.2 million at June
30, 2008, a 37% increase over June 30, 2007.
Fifteen new customers purchased ATG commerce solutions and thirty
net new customers purchased eStara e-commerce optimization services
this past quarter. New and repeat business was generated from
customers including Cineplex Entertainment, Conde Nast, Epson,
LexisNexis, Louis Vuitton, Royal Canadian Mint, Talbots and T-Mobile.
Net income in accordance with GAAP for the second quarter of 2008
was $348 thousand, or breakeven on a per diluted share basis. This
compares with a net loss of $2.7 million, or a loss of $0.02 per
share, in the second quarter of 2007.
Non-GAAP net income increased to $3.4 million for the second
quarter of 2008, or $0.03 per diluted share compared with a non-GAAP
net loss of $81 thousand, or breakeven per share for the second
quarter of 2007.
At June 30, 2008, ATG had $52.7 million in cash, cash equivalents,
and short-term and long-term marketable securities. Cash flow from
operations for the second quarter of 2008 was $7.3 million.
"We are very pleased with our second quarter financial
performance," said Julie Bradley, ATG's senior vice president and CFO.
"With two quarters behind us, product license bookings growth has
exceeded our expectations. Based on the expected continuation of
accelerating growth in e-commerce and our current pipeline our
guidance and outlook for the full-year remain positive. As a result we
are raising product license bookings guidance."
Financial Guidance
Product license bookings are now expected to grow 15% - 22% for
2008, up from our previously stated guidance of 10% - 20% growth.
Consistent with our business model, we expect cross-selling to remain
strong which equates to greater deferrals and ratable revenue
recognition.
In considering revenue guidance, we analyzed our assumptions
around our estimates of product license revenue that may be deferred.
Since the amount of product license bookings that are recognized
ratably may vary, we concluded that our original revenue guidance
range remains appropriate. Therefore, we are reiterating our full year
revenue guidance. We expect revenue to be in the range of $159 to $165
million.
We are also reiterating our full year income (loss) guidance. GAAP
net income (loss) for the year ending December 31, 2008 is expected to
be in the range of $(4.0) million to $1.0 million. GAAP net income
(loss) guidance includes an estimated $8.5 - $9.0 million of non-cash
equity-related compensation expense and amortization of acquired
intangibles of $4.5 - $5.0 million. Non-GAAP net income for the year
ending December 31, 2008 is expected to be in the range of $9.0
million to $15.0 million. Cash flow from operations for 2008 is
expected to be in the range of $28.0 million to $32.0 million.
Quarterly Conference Call
ATG management will discuss the company's second quarter 2008
financial results, recent highlights, and business outlook for the
remainder of 2008 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 "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. 50490096. A replay of the call will be available on the company's
website later in the day.
About ATG
A trusted, global specialist in e-commerce, ATG (Art Technology
Group, Inc., NASDAQ: ARTG) has spent the last decade focused on
helping the world's premier brands maximize the success of their
online businesses. ATG's software and on demand solutions are used by
over 900 companies to attract prospects, convert them to buyers and
enhance their multi-channel experience. ATG's e-commerce suite is top
ranked by the industry's most influential analyst firms. ATG powers
more of the top 300 internet retailers than any other vendor. ATG is
headquartered in Cambridge, Massachusetts, with additional locations
throughout North America and Europe.
(C) 2008 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.
*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 equity-related compensation. 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 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, 2007, and its quarterly report on Form 10-Q
for the period ended March 31, 2008, 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)
June 30, March December June 30,
31, 31,
2008 2008 2007 2007
-------- -------- -------- --------
ASSETS
Current Assets:
Cash, cash equivalents and
marketable securities (including
restricted cash of $1,669 as of
June 30, 2008 and March 31,
2008) $ 50,573 $ 44,711 $ 50,879 $ 41,197
Accounts receivable, net 40,501 36,850 40,443 34,561
Deferred costs, current 777 692 790 -
Prepaid expenses and other
current assets 3,705 4,288 2,741 4,502
-------- -------- -------- --------
Total current assets 95,556 86,541 94,853 80,260
Property and equipment, net 8,611 8,576 7,208 6,368
Intangible assets, net 9,938 11,021 11,109 13,561
Deferred costs, less current
portion 2,331 2,613 2,337 775
Marketable securities (including
restricted cash of $419 as of
June 30, 2008 and March 31,
2008) 2,124 2,222 1,062 -
Other assets 1,733 1,376 1,475 1,661
Goodwill 67,787 67,522 59,675 59,358
-------- -------- -------- --------
Total long-term assets 92,524 93,330 82,866 81,723
Total assets $188,080 $179,871 $177,719 $161,983
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Accounts payable $ 3,823 $ 4,485 $ 3,619 $ 4,259
Accrued expenses 19,182 16,711 19,082 14,283
Deferred revenue, current portion 42,610 37,501 35,577 34,902
Accrued restructuring, current
portion 646 857 855 1,050
Capital lease obligations - - - 21
-------- -------- -------- --------
Total current liabilities 66,261 59,554 59,133 54,515
Accrued restructuring, less
current portion - - 225 578
Other liabilities 498 498 487 -
Deferred revenue, less current
portion 11,558 10,826 10,777 4,745
-------- -------- -------- --------
Total long-term liabilities 12,056 11,324 11,489 5,323
Stockholders' equity 109,763 108,993 107,097 102,145
-------- -------- -------- --------
Total liabilities and
stockholders' equity $188,080 $179,871 $177,719 $161,983
======== ======== ======== ========
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 31, June 30, June 30,
2008 2008 2007 2008 2007
-------- --------- --------- --------- ---------
Revenue:
Product licenses $ 12,300 $ 9,257 $ 6,515 $ 21,557 $ 13,124
Recurring services 22,946 20,943 18,519 43,889 35,989
Professional and
education services 6,674 6,330 7,582 13,004 12,735
-------- --------- --------- --------- ---------
Total revenue 41,920 36,530 32,616 78,450 61,848
Cost of Revenue:
Product licenses 519 387 549 906 1,089
Recurring services 9,241 7,606 5,379 16,847 10,522
Professional and
educational
services 6,495 6,914 7,171 13,409 12,769
-------- --------- --------- --------- ---------
Total cost of
revenue 16,255 14,907 13,099 31,162 24,380
-------- --------- --------- --------- ---------
Gross Profit 25,665 21,623 19,517 47,288 37,468
Operating Expenses:
Research and
development 7,373 7,021 6,270 14,394 12,051
Sales and marketing 13,156 11,537 11,773 24,693 21,317
General and
administrative 4,863 4,329 4,648 9,192 9,183
-------- --------- --------- --------- ---------
Total operating
expenses 25,392 22,887 22,691 48,279 42,551
-------- --------- --------- --------- ---------
Income (loss) from
operations 273 (1,264) (3,174) (991) (5,083)
Interest and other
income, net 240 628 521 868 969
-------- --------- --------- --------- ---------
Income (loss) before
provision for
income taxes 513 (636) (2,653) (123) (4,114)
Provision for income
taxes 165 206 95 371 95
-------- --------- --------- --------- ---------
Net income (loss) $ 348 $ (842) $ (2,748) $ (494) $ (4,209)
======== ========= ========= ========= =========
Basic net income
(loss) per share $ 0.00 $ (0.01) $ (0.02) $ (0.00) $ (0.03)
======== ========= ========= ========= =========
Diluted net income
(loss) per share $ 0.00 $ (0.01) $ (0.02) $ (0.00) $ (0.03)
======== ========= ========= ========= =========
Basic weighted
average common
shares outstanding 128,805 128,435 127,388 128,620 127,291
======== ========= ========= ========= =========
Diluted weighted
average common
shares outstanding 135,010 128,435 127,388 128,620 127,291
======== ========= ========= ========= =========
Art Technology Group, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(UNAUDITED)
Three months ended Six Months Ended
--------------------------- ------------------
June 30, March 31, June 30, June 30, June 30,
2008 2008 2007 2008 2007
-------- --------- -------- --------- --------
Cash Flows from
Operating Activities:
Net income (loss) $ 348 $ (842) $(2,748) $ (494) $(4,209)
Adjustments to
reconcile net income
(loss) to net cash
provided by operating
activities:
Depreciation
and
amortization 2,191 2,028 1,925 4,219 3,779
Non-cash
stock-based
compensation
expense 2,001 1,830 1,441 3,831 2,525
Net changes
in operating
assets and
liabilities 2,742 4,079 5,832 6,821 12,432
-------- --------- -------- -------- -------
Net cash provided by
operating activities 7,282 7,095 6,450 14,377 14,527
Cash Flows from
Investing Activities:
Purchases of
marketable
securities (5,393) (9,197) (3,931) (14,590) (5,609)
Maturities of
marketable
securities 6,550 11,050 5,300 17,600 9,950
Purchases of
property and
equipment (1,040) (2,375) (1,023) (3,415) (2,422)
Collateralization
of letters of
credit - (2,088) - (2,088) -
Payment of
acquisition
costs, net of
cash acquired 1,150 (10,672) (36) (9,522) (829)
Decrease in other
assets - - (31) - (22)
-------- --------- ------- -------- -------
Net cash
provided by
(used in) in
investing
activities 1,267 (13,282) 279 (12,015) 1,068
Cash Flows from
Financing Activities:
Proceeds from
exercise of
stock options 147 509 413 656 647
Proceeds from
employee stock
purchase plan 265 250 234 515 436
Repurchase of
common stock (1,479) - (2,190) (1,479) (2,190)
Payment of
employee
restricted stock
tax withholdings (478) - - (478) -
Payments on
capital leases - - (18) - (35)
-------- --------- -------- --------- --------
Net cash
(used in)
provided by
financing
activities (1,545) 759 (1,561) (786) (1,142)
Effect of foreign
exchange rate changes
on cash and cash
equivalents (84) 186 (70) 102 (138)
Net increase (decrease)
in cash and cash
equivalents 6,920 (5,242) 5,098 1,678 14,315
Cash and cash
equivalents, beginning
of period 29,177 34,419 27,128 34,419 17,911
-------- --------- -------- --------- --------
Cash and cash
equivalents, end of
period $36,097 $ 29,177 $32,226 $ 36,097 $32,226
======== ========= ======== ========= ========
ART TECHNOLOGY GROUP, INC.
STATEMENTS OF OPERATIONS DATA
(In thousands)
(UNAUDITED)
Six months
Three months ended ended
-------------------- -------------
June March June June 30,
30, 31, 30,
2008 2008 2007 2008 2007
------ ------ ------- ------ ------
Equity-Related Compensation:
Cost of revenue $ 401 $ 344 $ 268 $ 745 $ 474
Research and development 332 405 324 737 545
Sales and marketing 608 570 393 1,178 709
General and administrative 660 511 456 1,171 797
------ ------ ------ ------ ------
Total equity-related compensation $2,001 $1,830 $1,441 $3,831 $2,525
====== ====== ====== ====== ======
Depreciation and Amortization:
Depreciation
Cost of revenue $ 686 $ 551 $ 335 $1,237 $ 654
Research and development 223 213 178 436 334
Sales and marketing 131 128 128 259 239
General and administrative 68 79 58 147 100
------ ------ ------ ------ ------
$1,108 $ 971 $ 699 $2,079 $1,327
------ ------ ------ ------ ------
Amortization
Cost of revenue $ 406 $ 460 $ 504 866 1,008
Research and development 81 - - 81 -
Sales and marketing 596 597 694 1,193 1,388
General and administrative - - 28 - 56
------ ------ ------ ------ ------
$1,083 $1,057 $1,226 $2,140 $2,452
------ ------ ------ ------ ------
Total depreciation and
amortization $2,191 $2,028 $1,925 $4,219 $3,779
====== ====== ====== ====== ======
Capital Expenditures:
Purchases of property and
equipment $1,040 $2,375 $1,023 $3,415 $2,422
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
(In thousands)
(UNAUDITED)
Three months ended, Six months ended
----------------------------- -------------------
June 30, March 31, June 30, June 30, June 30,
2008 2008 2007 2008 2007
--------- --------- --------- --------- ---------
Net income (loss)
GAAP $ 348 $ (842) $ (2,748) $ (494) $ (4,209)
Amortization of
acquired
intangibles 1,083 1,057 1,226 2,140 2,452
Equity-related
compensation 2,001 1,830 1,441 3,831 2,525
Net restructuring - - - - (68)
--------- --------- --------- --------- ---------
Net income (non-
GAAP) $ 3,432 $ 2,045 $ (81) $ 5,477 $ 700
========= ========= ========= ========= =========
Net income (non-
GAAP) per share:
Basic $ 0.03 $ 0.02 $ (0.00) $ 0.04 $ 0.01
========= ========= ========= ========= =========
Diluted $ 0.03 $ 0.02 $ (0.00) $ 0.04 $ 0.01
========= ========= ========= ========= =========
Shares used in per
share calculations:
Basic 128,805 128,435 127,388 128,620 127,291
========= ========= ========= ======== ========
Diluted 135,010 134,100 127,388 134,551 131,576
========= ========= ========= ======== ========
Reconciliation of Product License Bookings
(In thousands)
(UNAUDITED)
Three months ended, Six months ended
----------------------------- -------------------
June 30, March 31, June 30, June 30, June 30,
2008 2008 2007 2008 2007
--------- --------- --------- --------- ---------
Product license
bookings $ 15,693 $ 11,448 $ 12,166 $ 27,141 $ 21,087
Increase in product
license deferred
revenue (9,670) (5,693) (5,997) (15,363) (8,423)
Product license
deferred revenue
recognized 6,277 3,502 346 9,779 460
--------- --------- --------- --------- ---------
Product license
revenue $ 12,300 $ 9,257 $ 6,515 $ 21,557 $ 13,124
========= ========= ========= ========= =========
CONTACT: Art Technology Group, Inc.
Julie Bradley, 617-386-1005
Chief Financial Officer
jbradley@atg.com
or
Tucker Walsh, 617-386-1159
twalsh@atg.com
SOURCE: Art Technology Group, Inc.
