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Revenue Increased 6% and Non-GAAP Net Income Increased 41%
Company Announces a New Stock Repurchase Program
CAMBRIDGE, Mass.--(BUSINESS WIRE)-- Art Technology Group, Inc. (NASDAQ: ARTG), the premier provider of commerce solutions, today reported financial results for the third quarter ended September 30, 2009.
Revenue for the third quarter of 2009 grew to $43.4 million, a 6% increase over third quarter 2008 revenue of $40.8 million.
"Revenue, bookings and net income growth exceeded our expectations in the third quarter," stated Bob Burke, ATG's president and CEO. "Looking ahead to the fourth quarter, we are very excited about the level of sales activity and demand we're seeing in the market for our commerce solutions and expect a strong finish to the year."
Product license bookings, a non-GAAP measure which the company defines as the sale of perpetual software licenses, grew 9% to $10.4 million for the third quarter from $9.5 million in the year ago quarter. Approximately 41% of product license bookings in the third quarter were deferred and will be recognized ratably.
Net income in accordance with GAAP for the third quarter of 2009 increased to $4.0 million, or $0.03 per diluted share compared with net income of $786 thousand, or $0.01 per diluted share, in the third quarter of 2008.
Non-GAAP net income increased to $5.5 million for the third quarter of 2009, or $0.04 per diluted share compared with non-GAAP net income of $3.9 million, or $0.03 per diluted share for the third quarter of 2008.
Cash flow from operations for the third quarter of 2009 was $9.9 million. At September 30, 2009, ATG had $78.1 million in cash, cash equivalents, and marketable securities.
The company's Board of Directors has approved a new stock repurchase program that authorizes the repurchase of up to $25 million of ATG's common stock. This new authorization is in addition to the remaining $3.9 million under the Company's existing $20 million repurchase program authorized in April of 2007. The stock repurchase program authorizes the company to repurchase shares, in the open market or privately negotiated transactions, at times and prices considered appropriate by the company depending upon prevailing market conditions and other corporate considerations. As of October 27, 2009, ATG had approximately 127.0 million shares outstanding.
"We have executed extremely well in 2009 - consistently increasing year over year revenue while containing our costs," stated Julie Bradley, ATG's senior vice president and CFO. "We expect strong demand for our solutions to continue driving bookings, revenue and profit growth for the second half of 2009 as compared to the second half of 2008."
Quarterly Conference Call
ATG management will discuss the company's third quarter 2009 financial results, recent highlights, and business outlook 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. 33150677. 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 Commerce is the commerce platform and business user application solution top-rated by industry analysts for powering highly personalized, efficient and effective e-commerce sites. ATG's platform-neutral optimization services can be easily added to any Web site to increase conversions and reduce abandonment. These services include ATG Recommendations and ATG's eStara Click to Call and Click to Chat services. 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) 2009 Art Technology Group, Inc. ATG and Art Technology Group are registered trademarks. 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 30, June 30, December 31, September 30,
2009 2009 2008 2008
ASSETS
Current Assets:
Cash, cash equivalents
and marketable
securities (including
restricted cash of $ 0
at September 30, 2009 $ 73,972 $ 71,335 $ 60,983 $ 58,232
and June 30, 2009 and
$1,669 at December 31,
2008 and September 30,
2008)
Accounts receivable, net 31,850 39,155 35,109 35,779
Deferred costs, current 1,126 876 924 931
Deferred tax assets 534 560 560 -
Prepaid expenses and 2,910 3,266 3,814 3,411
other current assets
Total current assets 110,392 115,192 101,390 98,353
Property and equipment, 10,168 10,500 10,098 9,583
net
Intangible assets, net 4,991 5,917 7,770 8,854
Deferred costs, less 1,391 1,884 1,984 2,146
current portion
Marketable securities
(including restricted
cash of $419 as of
September 30, 2009, June 4,129 419 419 419
30, 2009, December 31,
2008 and September 30,
2008)
Other assets 1,483 1,457 1,423 1,625
Goodwill 65,683 65,683 65,683 67,692
Total assets $ 198,237 $ 201,052 $ 188,767 $ 188,672
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 4,245 $ 5,229 $ 2,958 $ 3,648
Accrued expenses 16,203 15,398 18,875 18,830
Deferred revenue, 40,025 41,765 38,782 41,401
current portion
Accrued restructuring - - 146 371
Total current liabilities 60,473 62,392 60,761 64,250
Other liabilities 249 1,775 1,775 498
Deferred revenue, less 9,956 13,046 15,285 11,344
current portion
Stockholders' equity 127,559 123,839 110,946 112,580
Total liabilities and $ 198,237 $ 201,052 $ 188,767 $ 188,672
stockholders' equity
ART TECHNOLOGY GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(UNAUDITED)
Three months ended Nine months ended
September June 30, September September September 30,
30, 30, 30,
2009 2009 2008 2009 2008
Revenue:
Product $ 10,890 $ 13,576 $ 10,764 $ 37,396 $ 32,321
licenses
Recurring 24,904 24,028 23,446 72,035 67,335
services
Professional
and education 7,587 6,823 6,584 20,288 19,588
services
Total revenue 43,381 44,427 40,794 129,719 119,244
Cost of
Revenue:
Product 399 457 539 1,246 1,445
licenses
Recurring 9,393 8,722 8,611 27,012 25,458
services
Professional
and education 6,029 5,505 6,393 16,836 19,802
services
Total cost of 15,821 14,684 15,543 45,094 46,705
revenue
Gross Profit 27,560 29,743 25,251 84,625 72,539
Operating
Expenses:
Research and 7,599 7,663 7,660 22,732 22,054
development
Sales and 12,503 12,541 12,282 37,332 36,975
marketing
General and 4,831 4,670 4,890 13,990 14,082
administrative
Total
operating 24,933 24,874 24,832 74,054 73,111
expenses
Income (loss)
from 2,627 4,869 419 10,571 (572 )
operations
Interest and
other income (314 ) 339 232 236 1,100
(expense), net
Income before
provision for 2,313 5,208 651 10,807 528
income taxes
Provision
(benefit) for (1,650 ) 588 (135 ) (750 ) 236
income taxes
Net income $ 3,963 $ 4,620 $ 786 $ 11,557 $ 292
Basic net
income per $ 0.03 $ 0.04 $ 0.01 $ 0.09 $ 0.00
share
Diluted net
income per $ 0.03 $ 0.03 $ 0.01 $ 0.09 $ 0.00
share
Basic weighted
average common 127,224 126,877 129,219 126,742 128,821
shares
outstanding
Diluted
weighted
average common 134,736 133,111 135,697 132,409 134,934
shares
outstanding
Art Technology Group, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(UNAUDITED)
Three months ended Nine months ended
September June 30, September September September
30, 30, 30, 30,
2009 2009 2008 2009 2008
Cash Flows from
Operating
Activities:
Net income $ 3,963 $ 4,620 $ 786 $ 11,557 $ 292
Adjustments to
reconcile net
income to net
cash provided by
operating
activities:
Depreciation and 2,149 2,417 2,299 6,829 6,518
amortization
Non-cash
stock-based 2,463 2,402 1,993 6,820 5,824
compensation
expense
Non-cash tax (1,871 ) - - (1,871 ) -
benefit
Net changes in
operating assets 3,237 (4,481 ) 3,029 (345 ) 9,846
and liabilities
Net cash provided
by operating 9,941 4,958 8,107 22,990 22,480
activities
Cash Flows from
Investing
Activities:
Purchases of
marketable (19,433 ) (6,925 ) (2,612 ) (28,287 ) (17,225 )
securities
Maturities of
marketable 5,400 4,082 4,892 14,725 22,492
securities
Purchases of
property and (978 ) (2,313 ) (2,220 ) (4,620 ) (5,612 )
equipment
Collateralization
of letters of - - - - (2,088 )
credit
Payment of
acquisition - - - - (9,522 )
costs, net of
cash acquired
Net cash (used
in) provided by (15,011 ) (5,156 ) 60 (18,182 ) (11,955 )
investing
activities
Cash Flows from
Financing
Activities:
Proceeds from
exercise of stock 915 364 951 1,428 1,608
options
Proceeds from
employee stock 279 276 238 797 754
purchase plan
Repurchase of (4,265 ) - - (4,265 ) (1,479 )
common stock
Payment of
employee (45 ) (445 ) (29 ) (873 ) (505 )
restricted stock
tax withholdings
Net cash (used
in) provided by (3,116 ) 195 1,160 (2,913 ) 378
financing
activities
Effect of foreign
exchange rate
changes on cash 388 1,018 (823 ) 1,130 (721 )
and cash
equivalents
Net (decrease)
increase in cash (7,798 ) 1,015 8,504 3,025 10,182
and cash
equivalents
Cash and cash
equivalents, 58,236 57,221 36,097 47,413 34,419
beginning of
period
Cash and cash
equivalents, end $ 50,438 $ 58,236 44,601 $ 50,438 $ 44,601
of period
ART TECHNOLOGY GROUP, INC.
STATEMENTS OF OPERATIONS DATA
(In thousands)
(UNAUDITED)
Three months ended Nine months ended
September June 30, September September 30, September 30,
30, 30,
2009 2009 2008 2009 2008
Equity-Related
Compensation:
Cost of $ 498 $ 488 $ 400 $ 1,396 $ 1,145
revenue
Research and 435 432 416 1,237 1,153
development
Sales and 653 609 510 1,774 1,688
marketing
General and 877 873 667 2,413 1,838
administrative
Total
equity-related $ 2,463 $ 2,402 $ 1,993 $ 6,820 $ 5,824
compensation
Depreciation
and
Amortization:
Depreciation
Cost of $ 746 $ 913 $ 713 $ 2,474 $ 1,950
revenue
Research and 259 301 275 829 711
development
Sales and 152 192 155 520 414
marketing
General and 65 85 72 227 219
administrative
$ 1,222 $ 1,491 $ 1,215 $ 4,050 $ 3,294
Amortization
Cost of $ 401 $ 399 $ 406 1,200 1,272
revenue
Research and - - 81 - 162
development
Sales and 526 527 597 1,579 1,790
marketing
General and - - - - -
administrative
$ 927 $ 926 $ 1,084 $ 2,779 $ 3,224
Total
depreciation $ 2,149 $ 2,417 $ 2,299 $ 6,829 $ 6,518
and
amortization
Capital
Expenditures:
Purchases of
property and $ 978 $ 2,313 $ 2,220 $ 4,620 $ 5,612
equipment
RECONCILIATION OF GAAP TO NON-GAAP NET INCOME
(In thousands, except per share data)
(UNAUDITED)
Three months ended Nine months ended
September June 30, September September September
30, 30, 30, 30,
2009 2009 2008 2009 2008
Net income, $ 3,963 $ 4,620 $ 786 $ 11,557 $ 292
GAAP
Amortization
of acquired 927 926 1,084 2,779 3,224
intangibles
Equity-related 2,463 2,402 1,993 6,820 5,824
compensation
Tax (1,871 ) - - (1,871 ) -
adjustments
Net income $ 5,482 $ 7,948 $ 3,863 $ 19,285 $ 9,340
(non-GAAP)
Net income
(non-GAAP) per
share:
Basic $ 0.04 $ 0.06 $ 0.03 $ 0.15 $ 0.07
Diluted $ 0.04 $ 0.06 $ 0.03 $ 0.15 $ 0.07
Shares used in
per share
calculations:
Basic 127,224 126,877 129,219 126,742 128,821
Diluted 134,736 133,111 135,697 132,409 134,934
Reconciliation of Product License Bookings
(In thousands)
(UNAUDITED)
Three months ended Nine months ended
September June 30, September September September
30, 30, 30, 30,
2009 2009 2008 2009 2008
Product
license $ 10,436 $ 16,612 $ 9,486 $ 39,396 $ 36,627
bookings
Product
license (4,321 ) (7,292 ) (4,078 ) (16,299 ) (19,441 )
bookings
deferred
Product
license
deferred 4,775 4,256 5,356 14,299 15,135
revenue
recognized
Product
license $ 10,890 $ 13,576 $ 10,764 $ 37,396 $ 32,321
revenue
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 amortization of acquired intangible assets, equity-related compensation, and related tax adjustments. Management believes that these normalized non-GAAP financial measures excluding these items better reflect the company's 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 investors 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, 2008 and its quarterly report on Form 10-Q for the period ended June 30, 2009, as filed with the SEC. These filings are available free of charge on a website maintained by the SEC at http://www.sec.gov.
Source: Art Technology Group, Inc.
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