Art Technology Group Announces Record Revenues; Strong Growth in Channel, Partnerships, and International Business in the First Quarter.

Business/Technology Editors

CAMBRIDGE, Mass.--(BUSINESS WIRE)--April 20, 2000

Quarterly Revenues Increase by 391% Over Previous Year and 62% Sequentially; Solution and Technology Partner Count Grows to Over 140;

OEM and ASP Channels Contribute 13%; International Growth at 57%

Sequentially

Art Technology Group, Inc. (ATG) (Nasdaq: ARTG), developers of e-commerce and online personalization applications, today announced better than anticipated first quarter results.

(In millions, except
 per share data
 and percentages)        Q1, 2000  Q1, 1999 % Growth Q4, 1999 % Growth

Total Revenue            $   21.6   $    4.4    391%  $   13.3   62%
  Services Revenue       $    5.3   $    2.6    104%  $    4.1   29%
     % of Total Revenue        25%        59%               31%
  Product Revenue        $   16.3   $    1.8    806%  $    9.2   77%
     % of Total Revenue        75%        41%               69%
Net Loss                 $   (0.6)  $   (1.1)         $   (9.5)
Basic and Diluted Loss
 Per Share               $   (0.01) $   (0.06)        $  (0.30)

Comments on the Quarter

"The growth of ATG continued to surpass even our own expectations during the first quarter of 2000," said Jeet Singh, chief executive officer. "Total revenues increased at a 62% sequential pace. We are especially encouraged, not only by the continued success of our solution and technology partners, but also by the growth of newer revenue-producing channels, such as our OEM and ASP partners, which accounted for 13% of total revenues in the first quarter.

"Our strategic focus on building relationships with solution and technology partners continues to generate excellent results - direct revenues from these partnerships generated more than 73% of product revenues during the first quarter. We believe that new marketing initiatives, launched in conjunction with our partners, as well as new programs geared towards education and supplementary services, have also resulted in dramatically increased interest in the ATG Dynamo(R) Product Suite worldwide."

"Our investment in international operations has been paying off remarkably quickly," Singh continued. "Having opened our first European office only three quarters ago, we now have offices in the U.K., Germany, Sweden, and the Netherlands, and have been seeing particularly strong sales growth internationally. International sales accounted for 13 percent of total revenue in the first quarter - a 57 percent sequential growth rate."

FIRST QUARTER HIGHLIGHTS:

New Customer Wins

ATG increased the number of customers on its roster to over 300, adding more than 60 new customers in a diverse array of industries. ATG customer wins during the first quarter included companies such as Britannic Assurance; Capital One; Classified Ventures; Direct Line Group Services, LTD.; Elizabeth Arden; Forbes; Inc.com Inc.; marsmusic.com; MLG Internet Inc. (Musicland); Pfizer; Techfuel Inc.; a major financial service client; and a Fortune 10 company.

Repeat Business

In addition to new customers, ATG secured additional revenues from numerous existing customers, including companies such as 3M, CheMatch.com, Eastman Kodak, EDS, J.Crew, Kaplan Educational Services, Moore Business Forms, MTV Networks, Network Solutions, RX.com, Tech Republic, and TheStreet.com.

Channel Growth Continues

ATG added 36 partners to its roster, raising the total to approximately 140. The company's system integrator partnerships accounted for 73% of product revenue in the first quarter. Large consultancies including PriceWaterhouseCoopers, EDS, and CSC significantly increased their level of contribution. In addition, ATG experienced growing contributions from OEM and ASP-based partnerships, which generated close to 13% of total revenue in the first quarter, up substantially from the previous quarter.

New solution partners include Ad Metam; AU System; Calian Ltd; Clarity; Critical Mass; DCP; Etinuum; I-Kinetics; InfoSphere; Lupine Technology Inc.; Modem Media; Nextera Interactive; Omnic Labs; Optus e-business Solutions; PA Consulting; Painted Word; Primeon; Studio Mechanica; ThoughtMill; T-Visions; Vision Consulting; Webtechnik; and Xpedior. New technology partners include Macromedia, Screaming Media, Siebel, and Times Ten.

International Infrastructure and Partnerships Yield Results

During the first quarter, we also signed over 30 new contracts in Italy, Finland, France, Germany, Netherlands, Spain, Sweden, Norway, and the U.K. These customers included a number of market leaders in the banking, insurance, media and retail industry sectors. Partnerships outside of the U.S. strengthened with partners such as Cap Gemini, e-Tree, Fi System, Materna Information & Communications, PA Consulting, PriceWaterhouseCoopers, and Quidnunc introducing ATG to major customers.

Major Marketing and Sales Initiatives

ATG has been successful in expanding its worldwide marketing and sales efforts. The company increased marketing and sales staffing by 37 in the first quarter, and launched multiple programs in field marketing, channel sales, partner management, education, and support, as well as a successful marketing campaign intended to expand the company's worldwide market visibility and awareness. To complement its internal initiatives, the company engaged the services of numerous agencies including Partners & Simons; The Horn Group; Fitch, Inc.; and Sharon Merrill Associates, Inc. to provide advertising, public relations, branding, and investor relations strategy and support, respectively. Sales staffing worldwide increased to almost 100 in the first quarter to support an expanded sales presence in North America including Atlanta, Cambridge, Chicago, Cleveland, Dallas, Denver, Los Angeles, New York, Seattle, and Washington D.C., and internationally in the Netherlands, Germany, Sweden, and the U.K.

Organizational Developments:

An Enhanced Infrastructure

--In February, Paul Shorthose, the company's chief operating officer, was appointed president of ATG. Shorthose will continue to oversee the day-to-day operations of the company and manage expanded sales, marketing, and services.

--ATG bolstered its sales organization through the promotion of several executives in February. These promotions included Lauren J. Kelley to senior vice president of worldwide sales, Paul J. Gariboldi to vice president of North American sales, and Roger Andrews to vice president of Europe, Middle East, and Africa sales.

--ATG increased its total headcount by 23 percent sequentially, to 397 employees.

A Continued Emphasis on Customers and Partners

--The launch of the ATG Dynamo Partner Program, composed of six individual programs, strengthens the company's ability to establish and maintain successful relationships with e-business solutions providers such as system integrators, technology consultants, and Web site developers.

More Advances in Technology

--ATG strengthened its technology as well as business relationship with Sun Microsystems, Inc. By licensing Java(TM) 2, Enterprise Edition (J2EE), ATG will assure its customers and partners of full J2EE compliance coupled with the performance, scalability, and flexibility that is a hallmark of ATG Dynamo Application Server and a necessity for building large-scale e-commerce sites.

--ATG Dynamo's support for Hewlett-Packard Company's HP-UX 11 operating environment enables businesses to build and deploy high performance personalized e-commerce sites based on HP's highly available hardware platform.

A Stock Split

--The company's two-for-one stock split, effective on March 24, raised the number of ATG shares outstanding to approximately 66 million.

Comments on the Remainder of 2000

"We are excited by the growing market opportunities that are opening to ATG, and encouraged by the company's excellent performance and by its rapidly growing reputation as a leading platform for enterprise e-commerce and online customer management," Singh said. "Moving forward, we expect to further develop the key channels that will act as an extended sales and marketing engine and will continue to be strategically important to us in the coming years."

"We will also look to further our reach into new markets, both domestic and international, by accelerating our investment in direct sales and marketing," Singh said. "Our first substantial initiatives in this area have shown very rapid return on investment, and have been very well received by partners and customers alike. This, coupled with ongoing investment in ATG products, will establish our positioning for what we hope will be long-term growth and profitability."

About Art Technology Group

Art Technology Group, Inc. is a leading provider of Internet customer relationship management and electronic commerce products and services. ATG offers an integrated suite of Java application server-based products and services, as well as related application development, integration, and support services. The ATG Dynamo(R) Product Suite enables Global 1000 enterprises, as well as new businesses using the Internet as their primary business channel, to understand, manage, and build their online customer relationships and to more effectively market, sell, and support their products and services over the Internet.

The Dynamo solution is designed to provide businesses with the core platform and software tools required to develop and deploy personalized, scalable, and reliable e-commerce Web sites. Dynamo is licensed to over 300 customers including 3M, BabyCenter, BMG Direct, Eastman Kodak, Informix, Network Solutions, Sun Microsystems, and TheStreet.com. The company is headquartered in Cambridge, MA , with additional locations throughout North America and Europe.

This press release contains forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. For this purpose, any statements using the terms "will," "should," "could," "anticipates," or "believes," or other comparable terminology, are forward-looking statements. 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. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are: ATG's history of losses and limited operating history in selling software products; fluctuations in ATG's quarterly operating results; ATG's dependence on a small number of relatively large, nonrecurring orders each quarter; the new and rapidly evolving nature of the customer relationship management solutions market; intense competition; the possible loss of ATG's relationships with resellers and original equipment manufacturers; ATG's dependence on key personnel; ATG's need to expand its sales and distribution capabilities; ATG's dependence on third-party systems integrators; ATG's need to implement and improve operational systems; the possible loss of money on fixed-price contracts; the need to adapt to rapid changes so products do not become obsolete; ATG's reliance on the Java programming language; the possibility of errors or defects in ATG's software products; the adverse impact of future regulations; the adverse impact of privacy concerns relating to the Internet and ATG's products; as well as other risk factors described from time to time in ATG's periodic reports and registration statements filed with the Securities and Exchange Commission. ATG cannot guarantee any future results, levels of activity, performance, or achievements. Moreover, neither ATG nor anyone else assumes responsibility for the accuracy and completeness of these statements. ATG undertakes no obligation to update any of the forward-looking statements after the date of this press release.

Dynamo is a registered trademark of Art Technology Group.

Sun, Sun Microsystems, Java, J2EE, and The Network is the Computer trademarks or registered trademarks of Sun Microsystems, Inc. in the United States and other countries.

Attached are the company's condensed consolidated statements of operations and balance sheets.

                      ART TECHNOLOGY GROUP, INC.
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 (In thousands, except per share data)
                              (UNAUDITED)

                                                  Three Months Ended
                                                 March 31,   March 31,
                                                   2000         1999

REVENUES:
  Product licenses                               $ 16,247    $  1,806
  Services                                          5,325       2,614

    Total revenues                                 21,572       4,420

COST OF REVENUES:
  Product licenses                                    708        --
  Services                                          4,992       1,813

    Total cost of revenues                          5,700       1,813

    Gross profit                                   15,872       2,607

OPERATING EXPENSES:
  Research and development                          3,595       1,131
  Sales and marketing                              11,052       1,420
  General and administrative                        3,675         743
  Amortization of deferred compensation               304         216

    Total operating expenses                       18,626       3,510

LOSS FROM OPERATIONS                               (2,754)       (903)
INTEREST INCOME                                     2,147          50
INTEREST EXPENSE                                     --           (24)

    Net loss                                         (607)       (877)

ACCRETION OF DIVIDENDS, DISCOUNT AND
  OFFERING COSTS ON PREFERRED STOCK                  --          (244)

    Net loss available for common stockholders   $   (607)   $ (1,121)

Basic and diluted net loss per share             $  (0.01)   $  (0.06)

Shares used in computing basic and
  diluted net loss per share                       66,023      18,810




                      ART TECHNOLOGY GROUP, INC.
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                            (In thousands)
                              (UNAUDITED)



                                                March 31, December 31,
                                                   2000       1999

ASSETS

  CURRENT ASSETS:
     Cash and cash equivalents                   $ 93,906   $124,711
     Marketable securities                         34,557      5,137
     Accounts receivable, net                      17,851     12,539
     Unbilled services                              1,420        782
     Prepaid expenses and other current assets      3,056      1,908

                      Total current assets        150,790    145,077

     Property and equipment, net                    6,598      5,465
     Long-term marketable securities               11,495     19,394
     Other assets                                   7,029      7,799

                                                 $175,912   $177,735

LIABILITIES AND STOCKHOLDERS' EQUITY

  CURRENT LIABILITIES:
     Current maturities of long-term obligations $  2,750   $  3,000
     Accounts payable                               6,931     11,285
     Accrued expenses                               7,214      4,728
     Deferred revenue                               8,113      8,337

                      Total current liabilities    25,008     27,350

  Long-term obligations, less current maturities    3,500      4,000

  Stockholders' equity                            147,404    146,385

                                                 $175,912   $177,735