ATG Narrows Loss, Looks To Channel To Boost Revenue

Art Technology Group

For the quarter ended March 31, ATG reported a loss of $2.8 million, or 4 cents per share, on sales of $27.3 million. That compares with a loss of $12.9 million, or 19 cents per share, on sales of $43.3 million for the same quarter last year.

The earnings beat Wall Street consensus estimates by a penny, as analysts polled by First Call/Thomson Financial predicted a loss of 5 cents per share. The closing balance for cash, cash equivalents and marketable securities as of March 31 was $80 million.

ATG CEO Paul Shorthose told analysts during a conference call that he was pleased the company succeeded in meeting bottom-line revenue guidance in an extremely difficult economy.

"It's tough out there in the market today, and we are battling like everybody else," said Shorthose. "ATG will continue to manage the business tightly through this time period."

Shorthose highlighted 27 new customers gained during the quarter, including Target, Cablevision Systems, Gateway Learning, Restoration Hardware and Fannie Mae.

Shorthose credited ATG's multiapplication server strategy for a 30 percent increase in the pipeline, with a handful of multinational companies signing on to deploy ATG applications on top of third-party servers.

In addition, Shorthose said ATG is winning a number of deals through its new VAR program designed to complement the company's strategic alliance program.

During the first quarter, Shorthose said ATG signed up 11 VAR partners that provide increased geographic coverage and new vertical solutions for customers.

"We see channel revenues, both indirect and direct, as one of the key drivers to our business moving forward," said Shorthose. "We continue to focus on quality over quantity with our channel partners."

Shorthose said ATG's goal is to move the percentage of the company's revenue through indirect channels to 15 percent by the end of the year from the current 5 percent, and to 25 percent as a long-term goal.

In the second half of 2002, ATG will also release new products and complementary applications that will support the company's enterprise portal and commerce capabilities, Shorthose said.

"[These new products will simplify our ability to integrate with major up-line CRM and ERP applications like Siebel and SAP," said Shorthose. "Ease of integration is clearly a priority for many companies out there today."

Shorthose cited KPMG, IBM, Accenture and EDS as among the top producing system integrators using ATG products.

Meanwhile, Ed Terino, CFO at ATG, told analysts during the call that preserving cash and continuing to effectively manage expenses were two primary objectives during the quarter.

Terino said the company anticipates a loss for the second quarter in the range of 2 cents to 6 cents per share on revenue of between $25 million and $29 million.