ATG Reports Fourth Quarter and Full-Year 2006 Financial Results.

Revenue Grew 14% Year-Over-Year

GAAP Net Income Increased 68% Year-Over-Year

Cash Flow from Operations Increased 95% Year-Over-Year

CAMBRIDGE, Mass. -- Art Technology Group, Inc. (NASDAQ: ARTG), the leading eCommerce platform provider, today reported financial results for the fourth quarter and year ended December 31, 2006.

Revenue for the fourth quarter of 2006 grew 25% to $32.2 million, compared with fourth quarter 2005 revenue of $25.7 million. Revenue for the year ended December 31, 2006 grew 14% to $103.2 million, compared with revenue of $90.6 million for 2005.

Net income in accordance with United States Generally Accepted Accounting Principles (GAAP), for the fourth quarter of 2006 was $5.1 million, or $0.04 per diluted share. This compares with net income of $3.2 million, or $0.03 per diluted share, in the fourth quarter of 2005.

GAAP net income for the year ended December 31, 2006 increased 68% to $9.7 million or $0.08 per diluted share. This compares with net income of $5.8 million or $0.05 per diluted share for 2005. GAAP net income includes a $2.6 million income tax benefit related to certain tax reserves in foreign locations that were no longer required due to closed audit years and to statue of limitation expirations.

Non-GAAP net income1 was $4.6 million for the fourth quarter of 2006, or $0.04 per diluted share, compared with non-GAAP net income of $3.8 million, or $0.03 per diluted share for the fourth quarter of 2005. Non-GAAP net income for the year ended December 31, 2006 was $13.6 million, compared with $8.5 million for 2005.

"ATG had an excellent year of revenue growth and increased profitability," said Bob Burke, ATG's president and CEO. "We executed on the financial objectives we set forth at the beginning of 2006, including significant improvement to our profitability while accelerating investment in our on demand business. The acquisition of eStara in the fourth quarter has been a great addition to ATG's overall portfolio and a solid contributor to recurring revenue growth. In 2007, we expect to see even more demand for our eCommerce and eStara solutions, as the overall online business market continues to expand."

ATG generated business from new and repeat customers during the fourth quarter including AT&T, Bluefly, Casual Male, CVS, Jenny Craig, Josten's, Scotts, Simply Health and Sony Ericsson. In addition, eStara signed on several new customers including Autobytel, Fonecta, and Ziff Davis.

"We are very pleased with our 2006 results and specifically our cash flow from operations, which increased 95% year-over-year," said Julie Bradley, ATG's senior vice president and CFO. "Looking ahead to 2007, we anticipate many of our license customers will also purchase ATG and eStara on demand offerings. As a result, we expect an increasing portion of our license revenue will be recognized ratably. We estimate this will have a near term impact on revenue and profitability; however, our ability to generate cash from operations will continue to accelerate."

Financial Guidance and Business Outlook

Revenue for 2007 is expected to be in the range of $117 million to $123 million. GAAP net income for the year ending December 31, 2007 is expected to be in the range of a loss of $4 million to breakeven. This guidance includes an estimated $5.0 - $6.0 million of non-cash equity-related compensation expense, reflecting the company's adoption of SFAS 123R and amortization of acquired intangibles of $5.2 million. It also reflects our expectation that, as compared with 2006, an increasing percentage of our license revenue in 2007 will be recognized ratably. Overall, we expect revenue, plus change in deferred to grow at least 25% in 2007.

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Quarterly Conference Call

ATG management will discuss the company's fourth-quarter and full-year 2006 financial results, recent highlights, and business outlook for 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 [phone] (or [phone] for international calls) and using conference ID No. 5547015. A replay of the call will be available on the company's website later in the day.

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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 B2C e-commerce suite is ranked the #1 current offering by Forrester Research, 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 Cabelas, 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, Nike, 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.

(1)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 and non-cash 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. Also, the company's financial results have not historically reflected the impact of non-cash compensation charges required by the adoption of SFAS 123R effective in 2006, and management believes it may be helpful to investors to present a measure of its financial results that is prepared on a basis that is comparable to its reported results for prior periods. The company uses the normalized 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 table above presents the most directly comparable GAAP financial measure and reconciles the normalized non-GAAP financial 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, 2005 and its quarterly report on Form 10-Q for the period ended September 30, 2006, as filed with the SEC. These filings are available free of charge on a website maintained by the SEC at http://www.sec.gov.