ATG Reports Third Quarter 2006 Financial Results.

CAMBRIDGE, Mass. -- Art Technology Group, Inc. (NASDAQ: ARTG), the leading eCommerce platform provider, today reported financial results for the third quarter ended September 30, 2006. Revenue and earnings came in ahead of preliminary results reported on October 5, 2006.

Revenue for the third quarter of 2006 was $21.8 million, compared with third quarter 2005 revenue of $22.7 million. Revenue for the first nine months of 2006 was $71.0 million, compared with revenues of $65.0 million for the same period last year.

Net loss in accordance with United States Generally Accepted Accounting Principles (GAAP), for the third quarter of 2006 was $285,000, or $(0.00) per share. This compares with net income of $1.5 million, or $0.01 per diluted share, in the third quarter of 2005. GAAP net income in the third quarter of 2006 includes equity-related compensation charges of approximately $1.0 million primarily reflecting the company's adoption of Statement of Financial Accounting Standards No. 123R on January 1, 2006.

Non-GAAP net income* for the third quarter of 2006 was $1.3 million, or $0.01 per diluted share, compared with non-GAAP net income of $2.0 million, or $0.02 per diluted share for the third quarter of 2005. Non-GAAP net income for the first nine months of 2006 was $9.0 million, compared with $5.2 million for the same period last year.

Cash, cash equivalents, and marketable securities as of September 30, 2006 increased $3.0 million to $36.6 million from $33.6 million as of December 31, 2005.

"Based on our pipeline for the fourth quarter and the continued healthy demand for our eCommerce solutions, we remain confident that we will not only close the deals that slipped from the third quarter but also meet our financial objectives for the full year," said Bob Burke, ATG's president and CEO. "In addition, we are excited about our recent acquisition of eStara. eStara's offerings improve conversion rates and customer care for both ATG and non-ATG powered web sites. And since eStara solutions are offered exclusively on demand, eStara will augment our overall recurring revenue streams."

Julie Bradley, ATG's senior vice president and CFO, said, "ATG is on track to meet its previously stated earnings guidance for the full-year and is raising 2006 revenue guidance to reflect the expected contribution from the eStara acquisition in the fourth quarter."

Third-Quarter Highlights

* Signed a definitive agreement to acquire eStara, a privately held company based in Reston, VA, in a stock and cash merger transaction. eStara's market leading Click to Call, Click to Chat and Call Tracking solutions will advance ATG's mission of enabling online sellers to find customers, convert them to buyers and ensure their satisfaction so they become loyal, repeat, and profitable customers. The acquisition was completed on October 2, 2006.

* Generated business from new and repeat customers including Boeing, Carrefour, Cellular South, Cingular, Hilton, Leaseplan, Nike, Team Athletic, US Bancorp and Woolworth's.

* Ranked a leader in eCommerce for B2C sites in Forrester Research's "Forrester Wave([TM]): Commerce Platforms, Q3 2006". ATG scored the highest overall in "current offering" --beating all major commerce competitors. In an additional report from Forrester titled "ATG Ups the Ante for BtoC Commerce Platforms," the analyst notes that ATG Commerce "continues to provide best-in-class support for personalized multichannel campaigns."

* Formed a strategic alliance with Accretive Commerce, a market-leading provider of fulfillment, customer care, and logistics services. The combination of ATG and Accretive Commerce provides customers with a comprehensive, fully integrated solution for ecommerce, customer care and fulfillment.

Financial Guidance and Business Outlook

Based on its acquisition of eStara and current market conditions, ATG is raising its revenue guidance for the full year 2006. Revenue for 2006 is expected to be in the range of $100 million to $108 million. GAAP net income for the year ending December 31, 2006 is expected to be in the range of $8 million to $11 million. This guidance includes an estimated $3.5 million to $4.5 million of non-cash equity-related compensation expense, reflecting the company's adoption of SFAS 123R effective January 1, 2006.

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Quarterly Conference Call

ATG management will discuss the company's third-quarter 2006 financial results, recent highlights, and business outlook for the remainder of 2006 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. 8384102. 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 that the world's most customer-conscious companies use to create a more relevant and consistent customer experience, throughout the marketing, commerce, and customer care lifecycle, and across the Web, e-mail, chat, call center, and mobile channels. Offering an alternative to the traditional silo-based approach to customer-facing applications, the ATG Wisdom[TM] platform integrates ATG's best of breed products into a seamless, more compelling experience made relevant to each customer and segment through unique content targeting technology. ATG solutions are available through traditional licensing or delivered as a service, on-demand. ATG's solutions power over 600 major brands, including Adobe, A&E Networks, American Eagle Outfitters, B&Q, Best Buy, Cingular Wireless, Dell, DirecTV, France Telecom, Hewlett-Packard, Intuit, Johnson & Johnson, Louis Vuitton, Mercedes-Benz, Neiman Marcus, New York & Company, Nokia, Nike, OfficeMax, PayPal, Philips, Procter & Gamble, Rubbermaid, Smith & Hawken, Symantec, T-Mobile, Target, Verisign, 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] 2006 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 below 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 and the amortization of intangible assets and non-cash compensation charges. Management believes that these normalized non-GAAP financial measures excluding restructuring and amortization 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 below 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 June 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.