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AUTONOMY CORPORATION...

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Autonomy announces another quarter of consecutive record growth (third quarter 1998)

Third Quarter 1998 Highlights Include: Record Revenues; First Operating Profits; New Customer Wins; a Major US Corporate Roll-Out and a Pan-European Project

Cambridge, England and San Francisco, California, November 9, 1998, - Autonomy Corporation plc. (EASD: AUTN) today announced net revenue for its third quarter ended September 30, 1998 of £1.7 million, a 204% increase from the same quarter in the previous year. This also represents an increase of 56% as compared to the second quarter of the current financial year.

Gross margins increased from 82% in the second quarter of 1998 to 89% this quarter. Significantly, the company generated its first operating profits of £62,000. Additionally, the loss on ordinary activities of £429,000 was struck after a foreign exchange loss on translation of £688,000 caused by the sudden and temporary strengthening of sterling at the end of the quarter. The net loss per share in the third quarter was 1.10 pence compared to a net loss per share of 1.00 pence in Q2 1998.

Lucent Technologies divisional roll-out

Autonomy's proprietary technology provides a solution to a fundamental problem facing many large companies - how to turn the knowledge base of individual employees, together with the large amounts of unstructured information held within an enterprise's computer systems, into a significant competitive advantage.

Following a successful pilot in Lucent's New Jersey-based Intellectual Property division, Autonomy was immediately contracted to complete a roll out across Lucent's entire legal division.

Significant customer wins

During the third quarter, Autonomy concluded a significant agreement with World Online to provide the complete infrastructure for the content management and personalization for their pan-European Internet service. World Online is rolling out this service in all major European countries. "The fact that Autonomy's technology is language independent is of enormous benefit to World Online," said Eric Tolsma, Director Programming and New Business Development from World Online International.

Autonomy has also secured important first contracts with, amongst others, the European Commission, I-net Bridge (a joint venture between financial information provider Bridge and media group Pearson), Reuters, Topica (a US provider of Internet messaging services) and J. Sainsbury, one of the UK's largest retailers. In addition, the Company has added more OEM customers including the document management company Global Recall and European e-commerce company, Point 4.

Industry recognition

Autonomy's Agentware Knowledge Management Suite has also been announced as the winner in the Product of the Year category at the Information Management Awards 1998, sponsored by Deloitte and Touche Consulting Group. Autonomy topped seven companies in the final, including Open Text and Microsoft. Autonomy was also a runner-up in the Economist-sponsored, 1998 Information Strategy Knowledge Awards, behind Andersen Consulting and the eventual winner Nortel.

Commenting on the results, Dr Mike Lynch today said: "Following on from the progress made in the second quarter, these results further demonstrate the demand for our products, both in the US and in Europe, and the strong foundations on which we're building the business. The developments over the past months indicate that our business model is sound and proving itself."

"The contract with Lucent demonstrates our ability to convert pilot projects into larger departmental roll-outs. This, combined with the quality of management we have attracted to the company over the summer months and the increasing value of contracts, bodes well for the continued future growth of the company. We look forward with confidence to building upon the excellent growth in the US and the continuing progress in Europe."

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