Year-Over-Year, Revenue Increased 14%, Non-GAAP Net Income Grew
26%, and Cash Balances Increased 20%
CAMBRIDGE, Mass.--(BUSINESS WIRE)--Oct. 28, 2008--Art Technology
Group, Inc. (NASDAQ: ARTG), the leading e-commerce solutions provider,
today reported financial results for the third quarter ended September
30, 2008.
Revenue for the third quarter of 2008 grew to $40.8 million, a 14%
increase over third quarter 2007 revenue of $35.9 million.
"The overall market dynamics and demand in our business continue
to be very positive as companies across a variety of industries invest
in e-commerce," stated Bob Burke, ATG's president and CEO. "ATG had a
solid third quarter and continues to execute well in what has become a
difficult macroeconomic environment."
Product license revenue recognized in accordance with United
States Generally Accepted Accounting Principles (GAAP) during the
third quarter of 2008 was $10.8 million, compared to $7.9 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 to $9.5 million
for the third quarter from $9.4 million in the year ago quarter.
Approximately 43% of product license bookings in the third quarter
were deferred and will be recognized ratably.
Seven new customers purchased ATG commerce solutions and 21 net
new customers purchased eStara e-commerce optimization services this
past quarter. New and repeat business was generated from customers
including Deutsche Post, Direct Wines, JC Whitney, Premier Farnell,
Vodafone, Williams-Sonoma, and Woolrich.
Net income in accordance with GAAP for the third quarter of 2008
was $786 thousand, or $0.01 per diluted share. This compares with a
net loss of $760 thousand, or a loss of $0.01 per share, in the third
quarter of 2007.
Non-GAAP net income increased to $3.9 million for the third
quarter of 2008, or $0.03 per diluted share compared with non-GAAP net
income of $3.1 million, or $0.02 per diluted share for the third
quarter of 2007.
At September 30, 2008, ATG had $58.7 million in cash, cash
equivalents, and short-term marketable securities. Cash flow from
operations for the third quarter of 2008 was $8.1 million.
Julie Bradley, ATG's senior vice president and CFO stated, "While
the fundamentals in our business remain strong, we recognize that
these are challenging economic times. Therefore, we have taken
proactive measures to more efficiently align our cost structure with
the uncertainties around fourth quarter IT spending. As a result, we
are narrowing our annual revenue guidance and managing our business to
exceed the midpoint of our previously stated net income guidance."
Financial Guidance
Revenue is now expected be in the range of $159 - $162 million.
GAAP net income (loss) for the year ending December 31, 2008 is
expected to be in the range of $(2.0) million to breakeven. GAAP net
income (loss) guidance includes an estimated $8.0 - $8.5 million of
non-cash equity-related compensation expense and amortization of
acquired intangibles of $4.0 - $4.5 million. Non-GAAP net income for
the year ending December 31, 2008 is expected to be in the range of
$10.0 million to $13.0 million. Product license bookings are now
expected to grow 10% - 20% for 2008. The company is reiterating its
cash flow from operations guidance. 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 third 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. 66991563. 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. The ATG Commerce application suite is the top-rated
platform by industry analysts for powering highly personalized,
efficient and effective e-commerce sites. The company's
platform-neutral e-commerce optimization services can be easily added
to any Web site to increase conversions and reduce abandonment. These
services include ATG Recommendations and eStara Connections. The
company is headquartered in Cambridge, Massachusetts, with additional
locations throughout North America and Europe For more information,
please visit http://www.atg.com.
(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.
ART TECHNOLOGY GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(UNAUDITED)
September December September
30, June 30, 31, 30,
2008 2008 2007 2007
--------- --------- --------- ---------
ASSETS
Current Assets:
Cash, cash equivalents and
marketable securities
(including restricted cash
of $1,669 as of September
30, 2008 and June 30, 2008) $ 58,232 $ 50,573 $ 50,879 $ 48,996
Accounts receivable, net 35,779 40,501 40,443 32,455
Deferred costs, current 931 777 790 608
Prepaid expenses and other
current assets 3,411 3,705 2,741 4,281
--------- --------- --------- ---------
Total current assets 98,353 95,556 94,853 86,340
Property and equipment, net 9,583 8,611 7,208 6,367
Intangible assets, net 8,854 9,938 11,109 12,335
Deferred costs, less current
portion 2,146 2,331 2,337 1,924
Marketable securities 419 2,124 1,062 -
(including restricted cash
of $419 as of September 30,
2008 and June 30, 2008)
Other assets 1,624 1,733 1,475 1,354
Goodwill 67,692 67,787 59,675 59,980
--------- --------- --------- ---------
Total long-term assets 90,318 92,524 82,866 81,960
Total assets $ 188,671 $ 188,080 $ 177,719 $ 168,300
========= ========= ========= =========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Accounts payable $ 3,648 $ 3,823 $ 3,619 $ 2,811
Accrued expenses 18,830 19,182 19,082 18,351
Deferred revenue, current
portion 41,401 42,610 35,577 34,719
Accrued restructuring,
current portion 371 646 855 889
Capital lease obligations - - - 4
--------- --------- --------- ---------
Total current liabilities 64,250 66,261 59,133 56,774
Accrued restructuring, less
current portion - - 225 380
Other liabilities 498 498 487 -
Deferred revenue, less current
portion 11,344 11,558 10,777 7,154
--------- --------- --------- ---------
Total long-term liabilities 11,842 12,056 11,489 7,534
Stockholders' equity 112,579 109,763 107,097 103,992
--------- --------- --------- ---------
Total liabilities and
stockholders' equity $ 188,671 $ 188,080 $ 177,719 $ 168,300
========= ========= ========= =========
ART TECHNOLOGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(UNAUDITED)
Three months ended Nine months ended
---------------------------- -------------------
September September September September
30, June 30, 30, 30, 30,
2008 2008 2007 2008 2007
--------- -------- --------- --------- ---------
Revenue:
Product licenses $ 10,764 $ 12,300 $ 7,873 $ 32,321 $ 20,997
Recurring services 23,446 22,946 19,346 67,335 55,335
Professional and
education
services 6,584 6,674 8,667 19,588 21,402
--------- -------- --------- --------- ---------
Total revenue 40,794 41,920 35,886 119,244 97,734
Cost of Revenue:
Product licenses 539 519 557 1,445 1,646
Recurring services 8,611 9,241 6,165 25,458 16,687
Professional and
education
services 6,393 6,495 7,587 19,802 20,356
--------- -------- --------- --------- ---------
Total cost of
revenue 15,543 16,255 14,309 46,705 38,689
--------- -------- --------- --------- ---------
Gross Profit 25,251 25,665 21,577 72,539 59,045
Operating Expenses:
Research and
development 7,660 7,373 6,632 22,054 18,683
Sales and
marketing 12,282 13,156 11,697 36,975 33,014
General and
administrative 4,890 4,863 4,498 14,082 13,681
--------- -------- --------- --------- ---------
Total operating
expenses 24,832 25,392 22,827 73,111 65,378
--------- -------- --------- --------- ---------
Income (loss) from
operations 419 273 (1,250) (572) (6,333)
Interest and other
income, net 232 240 575 1,100 1,544
--------- -------- --------- --------- ---------
Income (loss) before
provision for
income taxes 651 513 (675) 528 (4,789)
Provision (benefit)
for income taxes (135) 165 85 236 180
--------- -------- --------- --------- ---------
Net income (loss) $ 786 $ 348 $ (760) $ 292 $ (4,969)
========= ======== ========= ========= =========
Basic net income
(loss) per share $ 0.01 $ 0.00 $ (0.01) $ 0.00 $ (0.04)
========= ======== ========= ========= =========
Diluted net income
(loss) per share $ 0.01 $ 0.00 $ (0.01) $ 0.00 $ (0.04)
========= ======== ========= ========= =========
Basic weighted
average common
shares outstanding 129,219 128,805 127,461 128,821 127,349
========= ======== ========= ========= =========
Diluted weighted
average common
shares outstanding 135,697 135,010 127,461 134,934 127,349
========= ======== ========= ========= =========
Art Technology Group, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(UNAUDITED)
Three months ended Nine Months Ended
---------------------------- -------------------
September September September September
30, June 30, 30, 30, 30,
2008 2008 2007 2008 2007
--------- -------- --------- --------- ---------
Cash Flows from
Operating
Activities:
Net income (loss) $ 786 $ 348 $ (760) $ 292 $ (4,969)
Adjustments to
reconcile net
income (loss) to
net cash provided
by operating
activities:
Depreciation
and
amortization 2,299 2,191 1,981 6,518 5,760
Non-cash
stock-based
compensation
expense 1,993 2,001 1,589 5,824 4,114
Net changes
in operating
assets and
liabilities 3,029 2,738 4,689 9,846 17,121
--------- -------- --------- --------- --------
Net cash
provided by
operating
activities 8,107 7,278 7,499 22,480 22,026
Cash Flows from
Investing
Activities:
Purchases of
marketable
securities (2,612) (5,417) (3,603) (17,225) (9,212)
Maturities of
marketable
securities 4,892 6,550 4,675 22,492 14,625
Purchases of
property and
equipment (2,220) (1,017) (701) (5,612) (3,123)
Collateralization
of letters of
credit - - - (2,088) -
Payment of
acquisition
costs, net of
cash acquired - 1,151 - (9,522) (829)
Increase in other
assets - - - - (22)
--------- -------- --------- --------- ---------
Net cash
provided by
(used in)
investing
activities 60 1,267 371 (11,955) 1,439
Cash Flows from
Financing
Activities:
Proceeds from
exercise of stock
options 951 148 576 1,608 1,223
Proceeds from
employee stock
purchase plan 238 266 213 754 649
Repurchase of
common stock - (1,479) - (1,479) (2,190)
Payment of
employee
restricted stock
tax withholdings (29) (476) - (505) -
Payments on
capital leases - - (17) - (52)
--------- -------- --------- --------- ---------
Net cash
provided by
(used in)
financing
activities 1,160 (1,541) 772 378 (370)
Effect of foreign
exchange rate
changes on cash and
cash equivalents (823) (84) 229 (721) 91
Net increase
(decrease) in cash
and cash equivalents 8,504 6,920 8,871 10,182 23,186
Cash and cash
equivalents,
beginning of period 36,097 29,177 32,226 34,419 17,911
--------- -------- --------- --------- ---------
Cash and cash
equivalents, end of
period $ 44,601 $36,097 41,097 $ 44,601 $ 41,097
========= ======== ========= ========= =========
ART TECHNOLOGY GROUP, INC.
STATEMENTS OF OPERATIONS DATA
(In thousands)
(UNAUDITED)
Three months ended Nine months ended
---------------------------- -----------------
September June 30, September
30, 30, September 30,
2008 2008 2007 2008 2007
--------- -------- ---------- -------- --------
Equity-Related
Compensation:
Cost of revenue $ 400 $ 401 $ 274 $ 1,145 $ 748
Research and
development 416 332 310 1,153 855
Sales and marketing 510 608 456 1,688 1,165
General and
administrative 667 660 549 1,838 1,346
--------- -------- --------- -------- --------
Total equity-related
compensation $ 1,993 $ 2,001 $ 1,589 $ 5,824 $ 4,114
========= ======== ========= ======== ========
eStara Earn-out:
Cost of revenue $ - $ - $ 31 $ - $ 31
Research and
development - - 360 - 360
Sales and marketing - - 427 - 427
General and
administrative - - 214 - 214
--------- -------- --------- -------- --------
$ - $ - $ 1,032 $ - $ 1,032
========= ======== ========= ======== ========
Depreciation and
Amortization:
Depreciation
Cost of revenue $ 713 $ 686 $ 370 $ 1,950 $ 1,024
Research and
development 275 223 181 711 515
Sales and
marketing 155 131 130 414 369
General and
administrative 72 68 75 219 175
--------- -------- --------- -------- --------
$ 1,215 $ 1,108 $ 756 $ 3,294 $ 2,083
--------- -------- --------- -------- --------
Amortization
Cost of revenue $ 406 $ 406 $ 504 $ 1,272 $ 1,512
Research and
development 81 81 - 162 -
Sales and
marketing 597 596 694 1,790 2,082
General and
administrative - - 27 - 83
--------- -------- --------- -------- --------
$ 1,084 $ 1,083 $ 1,225 $ 3,224 $ 3,677
--------- -------- --------- -------- --------
Total depreciation and
amortization $ 2,299 $ 2,191 $ 1,981 $ 6,518 $ 5,760
========= ======== ========= ======== ========
Capital Expenditures:
Purchases of
property and
equipment $ 2,220 $ 1,017 $ 701 $ 5,612 $ 3,123
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
(In thousands)
(UNAUDITED)
Three months ended, Nine months ended
-----------------------------
September September
30, June 30, 30, September 30,
-------------------
2008 2008 2007 2008 2007
--------- --------- --------- --------- ---------
Net income (loss)
GAAP $ 786 $ 348 $ (760) $ 292 $ (4,969)
Amortization of
acquired
intangibles 1,084 1,083 1,225 3,224 3,677
Equity-related
compensation 1,993 2,001 1,589 5,824 4,114
eStara earn-out - 1,032 - 1,032
Net restructuring - - 9 - (59)
--------- --------- --------- --------- ---------
Net income (non-
GAAP) $ 3,863 $ 3,432 $ 3,095 $ 9,340 $ 3,795
========= ========= ========= ========= =========
Net income (non-
GAAP) per share:
Basic $ 0.03 $ 0.03 $ 0.02 $ 0.07 $ 0.03
========= ========= ========= ========= =========
Diluted $ 0.03 $ 0.03 $ 0.02 $ 0.07 $ 0.03
========= ========= ========= ========= =========
Shares used in per
share calculations:
Basic 129,219 128,805 127,461 128,821 127,349
========= ========= ========= ======== ========
Diluted 135,697 135,010 133,079 134,934 131,576
========= ========= ========= ======== ========
Reconciliation of Product License Bookings
(In thousands)
(UNAUDITED)
Three months ended, Nine months ended
----------------------------- -------------------
September September
30, June 30, 30, September 30,
2008 2008 2007 2008 2007
--------- --------- --------- --------- ---------
Product license
bookings $ 9,486 $ 15,693 $ 9,374 $ 36,627 $ 30,357
Increase in product
license deferred
revenue (4,078) (9,670) (2,146) (19,441) (10,495)
Product license
deferred revenue
recognized 5,356 6,277 645 15,135 1,135
--------- --------- --------- --------- ---------
Product license
revenue $ 10,764 $ 12,300 $ 7,873 $ 32,321 $ 20,997
========= ========= ========= ========= =========
*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 June 30, 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.
CONTACT: Art Technology Group, Inc.
Kim Maxwell, 617-386-1006
Director, Investor Relations
kmaxwell@atg.com
SOURCE: Art Technology Group, Inc.
