ATG Reports Third Quarter 2007 Results.

Revenue Increased 65% Year-Over-Year; Cash Flow from Operations Increased 400% Year-Over-Year; Company Raises Annual Revenue Guidance

CAMBRIDGE, Mass. -- Art Technology Group, Inc. (NASDAQ: ARTG), the leading e-commerce platform provider, today reported financial results for the third quarter ended September 30, 2007.

Revenue for the third quarter of 2007 grew to $35.9 million, a 65 percent increase over third quarter 2006 revenue of $21.8 million. Cash flow from operations for the third quarter of 2007 was $7.5 million, a 400 percent increase over third quarter 2006 cash flow from operations of $1.5 million.

"We are extremely pleased with our third quarter results," stated Bob Burke, ATG's president and CEO. "Based on our solid pipeline and market research by industry analysts, we continue to believe companies are in the early stages of reinvestment in e-commerce solutions. Companies want more control and customization over their online storefronts, including the ability to offer a consistent multi-channel experience for their consumers, and ATG's product suite addresses these needs."

As previously communicated, an increasing amount of ATG's product license, on demand and related services revenue is being deferred and recognized in future periods. This trend affects ATG's short-term revenue and profitability but over the longer term should result in greater stability and predictability in the Company's revenue. The Company's recurring and ratable revenue streams are increasing due to the fact that customers are leveraging more ATG solutions, specifically eStara and OnDemand.

Product license revenue recognized in accordance with United States Generally Accepted Accounting Principles (GAAP) during the third quarter of 2007 was $7.9 million, compared to $4.8 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 96 percent year over year to $9.4 million for the quarter from $4.8 million in the year ago quarter. Approximately 22 percent or $2.1 million of product license bookings in the third quarter of 2007 will be recognized ratably.

Net loss in accordance with GAAP for the third quarter of 2007 was $760 thousand, or $(0.01) per share. This compares with a net loss of $285 thousand, or $(0.00) per share, in the third quarter of 2006.

Non-GAAP net income was $3.1 million for the third quarter of 2007, or $0.02 per diluted share compared with non-GAAP net income of $1.3 million, or $0.01 per diluted share for the third quarter of 2006.

At the end of the third quarter 2007, ATG had $49.0 million in cash, cash equivalents, and marketable securities.

This past quarter, seven new customers purchased ATG commerce solutions and the number of customers that deployed eStara solutions increased by 45. New and repeat business was generated from customers including American Airlines, Boeing, Christian Dior, Deluxe, Philips, Restoration Hardware, Trade India, Thomas Cook, uPromise, and Vodafone.

Julie Bradley, ATG's senior vice president and CFO stated, "ATG continues to effectively execute its business model transition. For the first nine months of 2007, product license bookings grew 38 percent, service revenue grew 57 percent and cash flow from operations grew 261 percent, exceeding our expectations. As a result, we are raising revenue guidance, and look forward to a strong finish to 2007."

Financial Guidance and Business Outlook

Revenue for 2007 is expected to be in the range of $130 million to $133 million. GAAP net income for the year ending December 31, 2007 is expected to be in the range of a net loss of $5.0 million to a net loss of $7.0 million. This guidance includes an estimated $5.0 - $6.0 million of non-cash equity-related compensation expense, amortization of acquired intangibles of $5 million, and eStara acquisition related compensation expense of $1.4 million. Cash flow from operations for 2007 is expected to be in the range of $24.0 million to $25.0 million.

Quarterly Conference Call

ATG management will discuss the company's third quarter 2007 financial results, recent highlights, and business outlook for the remainder of 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. 18765842. 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 e-commerce suite is ranked the #1 current offering and #1 in strategy by the industry's most influential analyst firms, 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, Cabela's, Carrefour, Cingular, Coca Cola, Continental Airlines, CVS, Dell, DirecTV, El Corte Ingles, Expedia, France Telecom, Harvard Business School Publishing, Hewlett-Packard, Hilton, HSBC, Intuit, Macy's, Meredith, Microsoft, Neiman Marcus, New York & Company, 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.

*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 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.

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 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, 2006, and its quarterly report on Form 10-Q for the period ended June 30, 2007, as filed with the SEC. These filings are available free of charge on a website maintained by the SEC at http://www.sec.gov.