ATG reports 65% increase in Q3 revenue as e-commerce software sales soar
Art Technology Group Inc., which provides e-commerce software and hosting services, today reported a 65% increase in third quarter revenue to $35.9 million from $21.8 million in Q3 last year. ATG’s net loss widened to $760,000 from $285,000 a year ago, which the company attributed to a previously announced shift to deferring recognition of a larger portion of its revenue to future quarters.
“We’re very pleased with our third quarter results and we expect 2007 to be a very, very good year for ATG,” president and CEO Bob Burke told analysts today.
The company projected revenue for the year of between $130 million and $133 million versus 2006 revenue of $103 million. The company projected a net loss for the year of between $5 million and $7 million, including non-cash equity-related compensation expenses and certain expenses related to its acquisition last year of eStara, which provides web site operators with click-to-call and live chat services. The company projects net cash flow from operations for 2007 in the range of $24 and $25 million
ATG reported especially strong growth in revenue from software licenses. The company recognized $7.9 million in product license revenue in the third quarter, 65% more than the $4.8 million booked in the same quarter of 2006. Counting deferred revenue, license revenue grew 96% to $9.4 million.
Shortly after acquiring eStara, ATG announced last December it would recognize revenue from contracts with a subscription component, such as web site hosting or eStara services, over the lifetime of the contract. Those contracts typically are for four years.
Burke says ATG’s prospects are good, citing projections from industry analysts that many companies are just beginning to upgrade their e-commerce platforms. He says ATG has identified 6,100 companies as targets, mainly midsized and larger retailers, telcos and other organizations.
The company said seven new customers purchased ATG commerce technology in the third quarter and 45 customers deployed systems from its eStara unit. Among the customers mentioned were online retailer Restoration Hardware, No. 96 in the Internet Retailer Top 500 Guide, and luxury goods manufacturer Christian Dior.
International sales have accounted for 31% of ATG’s revenue so far this year, up from 26% last year. Burke told analysts he expects non-U.S. revenue to continue to tick up as the result of growth in emerging economies like China and India. “That’s where new consumers are coming online,” he said.
To keep pace with its growth, ATG increased the number of its employees from 414 as of June 30 to 429 at the end of the third quarter, and expects to reach 460 by the end of the year, said Julie Bradley, chief financial officer. She also noted that ATG is spending 18% of its revenue on research and development.
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