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AUTONOMY CORPORATION Plc - Quarterly Results Announcement For The 2nd Quarter Ended 30 June 1999
August 5, 1999
Autonomy Corporation plc ("Autonomy") is a leading provider of Knowledge Management and New Media technology products, which automate the handling of vast amounts of unstructured information on the Internet and across the enterprise. Autonomy floated on Easdaq (EASD: AUTN) in July 1998.
Key Features
Q2 1999 versus Q2 1998
- Turnover up 237% to GBP 3.71 million (Q2 1998: GBP 1.1 million)
- Gross margins improved 10 percentage points to 92% (Q2 1998: 82%)
- Gross profits increased 278% to GBP 3.40 million (Q2 1998: GBP 0.90 million)
- Profit before and after taxation of GBP 0.27 million, retained profit after minority interest of GBP 0.29 million (Q2 1998: loss before and after tax of GBP 0.30 million)
- Basic earnings per share for Q2 1999 of 0.73p (Q2 1998: loss per share of 1.00p)
Q2 1999 versus Q1 1999
- Turnover up 48% to GBP 3.71 million (Q1 1999: GBP 2.51 million)
- Gross margins up 8 percentage points from 84% to 92%
- Gross profits increased 61% to GBP 3.40 million (Q1 1999: GBP 2.12 million)
- Profit before and after tax of GBP 0.27 million, retained profit after minority interest of GBP 0.29 million (Q1 1999: loss before and after tax of GBP 0.12 million, retained loss after minority interest of GBP 0.17 million)
- Basic earnings per share for Q2 1999 of 0.73p (Q1 1999: loss per share of 0.42p)
Corporate highlights for the first half of 1999
- New OEM licensing agreements with Octane Software, FutureTense, CNS and Intraspect
- High-profile US New Media customers including Looksmart, Talkway, BCI, Employon.com, Seattle Times and the IEEE
- Autonomy's largest New Media contract signed with breathe net
- New Knowledge Management customers include Lucent Technologies, Butler Group, the US Government and the City of London Police
- Establishment of Australasian operations, headquartered in Sydney
- Important new partnerships with Netdecisions, SAIC, CAP Gemini, Pixel Park, Afina Systems and CSC, one of the world's largest IT consultancy and services company
- Continued development of international markets with significant sales in Germany with Milchstrasse as well as penetration in Switzerland and Spain through partnerships with CSC and Afina Systems
- Expansion of US Sales and Marketing operations with the addition of seven new hires
Commenting on the results Dr Mike Lynch, Managing Director and Chief Executive Officer of Autonomy Corporation plc today said:
"This has been our fifth consecutive quarter of significant growth. Autonomy is continuing to experience excellent growth in its core markets, but one of the key growth areas is the licensing of our core technology to other software application developers. This helps sustain future growth as well as enabling us to aggressively build awareness in multiple markets simultaneously. Additionally, the building of OEM and partnership relationships suggests that there is an increasing demand for Autonomy's technology to be embedded within a broad range of software products.
This quarter we have also concluded our largest agreement to date, with breathe net, in the convergent markets of mobile computing, telecommunications and the Internet. This will enable Autonomy to demonstrate its technological strengths across these fast-moving, high-profile markets. The conclusion of agreements with high-profile Internet players will also help build our profile in the US."
Autonomy Delivers Record 237% Growth
Second Quarter 1999 Shows a 237% Year-on-Year Increase in Sales and 48% Quarter-on-Quarter Increase in Sales
Cambridge, England and San Francisco, California, Thursday 5 August, 1999 - Autonomy Corporation plc (EASDAQ: AUTN) today announced net revenues for its 2nd quarter ended June 30, 1999 of GBP 3.71 million, a 237% increase on the comparable period in 1998. This also represents an increase of 48% over the 1st quarter of 1999. Autonomy also announced gross profits of GBP 3.40 million, a 278% increase on the comparative quarter of 1998 and a 61% increase on the 1st quarter of 1999.
Gross margins increased from the prior quarter to 92%. Net profit after minority interests was achieved of GBP 0.29 million in the 2nd quarter of 1999, against a 2nd quarter net loss after minority interests in 1998 of GBP 0.30 million and a net loss in the 1st quarter of 1999 of GBP 0.17 million. Basic earnings per share was achieved of 0.73p, as compared to a loss per share reported in the 2nd quarter of 1998 of 1.00p. The loss per share in the 1st quarter of 1999 was 0.42p.
In our European markets, revenues increased 62% quarter on quarter. Sales of our Knowledge Management products moved ahead 85% and sales of our New Media products increased 60%.
Following a period of significant investment in our US operations, sales moved ahead by 27% on a quarter-on-quarter basis with our New Media products experiencing an increase in sales of 83% on the back of customer wins with some high profile Internet players.
Significant New Media Contracts in the US
Autonomy's New Media technology has attracted major interest in the US, where it has been adopted by major Internet companies including: Looksmart, Talkway, BCI and Employon.com.
Looksmart, one of the US's top 25 websites, has purchased Autonomy's technology to automate the handling of its news and entertainment content, as well as to build communities of interests around its nearly one million website addresses and over 60,000 information categories. Utilised by MSN, Netscape and 220 ISPs, amongst others, Looksmart will use Autonomy's technology to better target its users with appropriate information and increase advertising revenues.
Another large-scale US Internet brand that has licensed Autonomy's technology is Talkway, an online chat and discussion forum which currently brings together over 25 million people and enables them to exchange ideas and views on over 35,000 topics. Autonomy will automatically handle around 2 million messages per day, which provide information on anything from entertainment to science. Autonomy will enable these messages to be accessed easily and to cluster users with similar interests, in order to build communities and derive advertising value.
Small and medium enterprises across the United States will also benefit from Autonomy's technology. BusinessConnect (BCI), a pioneer of subscription-based e-business solutions for small and medium sized businesses (SMEs), is using Autonomy to automate the targeting and delivery of corporate promotional material and broaden the effectiveness of their SME's efforts beyond passive 'brochureware" or basic e-commerce. Autonomy software will form the infrastructure to enable a complete turnkey e-business service that is comprehensive in scope, affordable, easy to implement and automatic in its maintenance.
Jobhunters, headhunters and enterprises looking to recruit staff will encounter Autonomy's technology in use at Employon.com. Autonomy's technology will automate the delivery, targeting and categorisation of thousands of online jobs across multiple industry sectors.
The new contracts above are in addition to those already announced during the 2nd quarter with the Seattle Times and the Institute of Electronic Electrical Engineers (IEEE) in the US.
Autonomy Continues New Media Expansion Across Europe
This quarter, Autonomy signed its largest ever agreement with breathe net, to provide personalised information via PCs, mobile phones, personal digital assistants and other devices across Europe. Aimed at mobile workers and people on the move, Autonomy's technology will form the infrastructure for a pan-European network of personalised portals that will automatically deliver breaking news over multiple convergence formats.
breathe net has stated that Autonomy's technology provides a critical piece of the puzzle because Autonomy has the only technology that can identify the main ideas in any text, it can automatically categorise each document, email or news story, insert hyperlinks to related material and even route it to those individuals most likely to be interested. This service will be launched this autumn, across the UK, France, Germany and the Netherlands.
Leading German consumer publishing company Milchstrasse has also adopted Autonomy's technology to automatically develop and maintain portals across its online consumer publications, including Max, Cinema, Fit for Fun, as well as the popular TV Spielfilm television magazine. Further German expansion came with a partnership with Pixel Park, Bertelsmann's leading multimedia company, focusing specifically on Internet and ecommerce initiatives.
Autonomy Nordic has also continued its growth following the recent acquisition of a stake by Autonomy Corp. Telenor DM Huset, the market leader in direct mail operations in Norway, has chosen Autonomy's knowledge management suite for its internal use. The Swedish Tourist Council has purchased Autonomy's Portal-in-a-Box™ to power their national Internet service for tourists. Merkantildata, a leading distributor and manufacturer of information technology in the Nordics, has also been signed up as a strategic partner across Scandinavia.
In the 2nd quarter, Autonomy also announced a contract win with EGG, the Prudential's successful direct financial services Internet site.
New OEM Licensing Agreements
Autonomy also recently announced several new OEM licensing agreements. FutureTense, which has licensed Autonomy's core technology into its flagship product line, the Internet Publishing System. In addition, Intraspect has licensed the company's technology to create the next generation of collaborative knowledge portals. CNS are integrating Autonomy technology into their Active Intranet product to provide an automated solution to the creation and maintenance of corporate intranets and provide access to information from other applications.
An OEM licensing agreement was also secured in the 2nd quarter of 1999 with Octane Software, to embed Autonomy's technology into their call centre and help desk products. This now adds to those already established with Nexor, Aenied, Verge, Portera and Insight.
Knowledge Management Contracts
On 13 July 1999, Autonomy announced that in the 2nd quarter of 1999, Lucent Technologies had initiated further significant rollouts of Autonomy's Knowledge Management software in the US, taking the total value under the contract to date to over USD 600,000.
Autonomy's Portal-in-a-Box™ product has also been adopted by the Butler Group to power its own industry-focused portal site - ITPortal.net. The Butler Group is one of Europe's leading technology analysts and independent IT research organizations. Autonomy will automate the management and delivery of industry news, analysts' research and technology audits through this jointly branded portal.
Also announced were important new contracts with the US Government and the City of London Police. Over 50% of the UK's police forces now use Autonomy's technology.
Building Partners Worldwide
As part of its commitment to expand its worldwide partner operations, Autonomy has formalised a relationship in Europe with CSC, one of the world's leading IT consultancy and services companies, concentrating on developing joint opportunities across multiple markets including financial services, manufacturing and pharmaceuticals.
Autonomy has also entered into a partnership agreement with Netdecisions, a company that specialises in the creation of web-enabled systems providing executives with the information and knowledge they need to make more timely and effective business decisions.
Netdecisions is headquartered in the UK, with offices in the US and India, and count among its customers blue-chip organizations such as Coca-Cola, the Automobile Association (AA) and the BBC. Their services include training, business information and e-commerce.
This in addition to the above, Autonomy has established partnerships with Science Applications International Corporation (SAIC) to implement Autonomy's knowledge management software across their own infrastructure as well as into their substantial customer base; Cap Gemini with whom Autonomy worked on their first joint customer, EGG; Pixel Park, Bertelsmann's leading multimedia company with whom Autonomy is collaborating on Internet and ecommerce initiatives; Afina Systems who will be developing the Spanish market with Autonomy as well as using Portal-in-a-Box™ to build their own corporate web-site.
"Autonomy continues to focus on the building of a direct and indirect international sales channels. The reception of our products by the indirect channel, including new OEM partners, has been encouraging and we look forward to attracting more partners in the future." Dr Lynch commented.
Operations
The US sales and marketing operations have been strengthened through the hiring of seven new employees, including: Leake Little as Director of Strategic Alliances and Amber Jayme as Marketing Director who have both joined from Oracle Corporation and sales professional Steven Yacker from Computer Associates-owned Platinum Software.
Dr Mike Lynch commented, "We have been able to attract some key industry individuals to scale the US sales and marketing efforts, following the recruitment of a VP of Marketing and Chief Operating Officer last quarter. This is beginning to reflect itself in the results of our US operations, notably increasing our New Media sales by 83% over the first quarter. Our profile continues to increase and recent press coverage in Forbes and Business Age helps to build momentum."
Future Prospects
Autonomy is continuing to experience excellent growth in its core markets, but one of the key growth areas is the licensing of its core technology to other software application developers. This helps sustain future growth as well as enabling the company to aggressively build awareness in multiple markets simultaneously. Additionally, the building of OEM and partnership relationships suggests that there is an increasing trend for Autonomy's technology to be embedded within a broad range of software products.
In July, Autonomy established its Australasian operations, headquartered in Sydney, Australia, to develop markets across the Pacific Rim. The formal launch will be take place on 25 August at Delphi Group's IKMS '99 Expo. The operations will be headed up by George Zachariou who, prior to joining Autonomy, was Chief Executive Officer at MIH Asia, Thailand's largest Internet company. Zachariou has also previously run sales and indirect channel operations for Olivetti and Digital amongst others.
Autonomy's Annual Report is now available. Please contact Autonomy on +44 1223 421220.
Further corporate and investor relations information on Autonomy can be found on www.autonomy.com.
Except for historical information contained herein, the matters discussed in this news release may be considered forward-looking statements that may involve risks and uncertainties. Factors which may affect the Company's operating results are detailed in the Company's Prospectus, relating to the admission to trading of Autonomy's ordinary shares on EASDAQ, published on 10 July 1998. These documents identify important factors that could cause actual events or results to differ materially from those contained in any forward-looking statements.
3 months ended 30 June 1999 Consolidated profit and loss account |
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| 3 months ended 30/6/99 £ |
3 months ended 30/6/98 £ |
6 months ended 30/6/99 £ |
6 months ended 30/6/98 £ |
12 months ended 31/12/98 £ |
||
| Turnover | 3,709,467 | 1,099,624 | 6,223,303 | 1,796,133 | 5,303,857 | |
| Cost of sales | (309,824) __________ |
(199,351) __________ |
(705,522) __________ |
(337,059) __________ |
(823,190) __________ |
|
| Gross profit | 3,399,643 | 900,273 | 5,517,781 | 1,459,074 | 4,480,667 | |
| Other operating expenses (net) | (3,607,449) __________ |
(1,215,137) __________ |
(6,422,428) __________ |
(2,326,443) __________ |
(6,489,380) __________ |
|
| Operating loss | (207,806) | (314,864) | (904,647) | (867,369) | (2,008,713) | |
| Net interest and foreign exchange | 475,614 __________ |
18,645 __________ |
1,051,335 __________ |
50,580 __________ |
264,986 __________ |
|
| Profit/loss on ordinary activities before and after taxation | 267,808 | (296,219) | 146,688 | (816,789) | (1,743,727) | |
| Minority interests | 26,103 __________ |
- __________ |
22,275 __________ |
- __________ |
- __________ |
|
| Profit/loss for the financial period | 293,911 | (296,219) | 124,413 | (816,789) | (1,743,727) | |
| Earnings/loss per share | ||||||
| basic (pence) | 0.73p | (1.00)p | 0.31p | (2.47)p | (5.02)p | |
| fully diluted (pence) | 0.71p | (1.00)p | 0.30p | (2.74)p | (5.02)p | |
Consolidated balance sheet as at 30 June 1999 |
||||
| As at 30/6/99 £ |
As at 30/6/98 £ |
As at 31/12/98 £ |
||
| Fixed assets | ||||
| Goodwill | 307,224 | - | - | |
| Intangibles | 1,991,797 | - | 2,301,831 | |
| Tangibles | 434,099 | 94,998 | 175,864 | |
| Investments | 95,160 __________ |
- __________ |
90,155 __________ |
|
| 2,828,280 | 94,998 | 2,567,850 | ||
| Current assets | ||||
| Debtors | 7,695,508 | 2,086,901 | 4,359,326 | |
| Cash and deposits | 15,733,171 __________ |
979,385 __________ |
16,798,908 __________ |
|
| 23,428,679 | 3,066,286 | 21,158,234 | ||
| Creditors due within one year | (3,684,988) __________ |
(1,041,125) __________ |
(1,699,676) __________ |
|
| Net current assets | 22,571,971 __________ |
2,120,159 __________ |
22,026,408 __________ |
|
| Net assets | 22,571,971 __________ |
2,120,159 __________ |
22,026,408 __________ |
|
| Capital and reserves | ||||
| Share capital | 404,615 | 297,773 | 402,230 | |
| Share premium | 27,883,031 | 6,907,980 | 27,677,048 | |
| Profit and loss | (5,800,726) __________ |
(5,085,594) __________ |
(6,052,870) __________ |
|
| Equity shareholders' funds | 22,486,920 | 2,120,159 | 22,026,408 | |
| Minority interests | 85,051 | - | - | |
| Total capital employed | 22,571,971 | 2,120,159 | 22,026,408 | |
3 months ended 30 June 1999 Consolidated cash flow statement |
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| 3 months ended 30/6/99 £ |
3 months ended 30/6/98 £ |
6 months ended 30/6/99 £ |
6 months ended 30/6/98 £ |
12 months ended 31/12/98 £ |
||
| Net case outflow from operating activities | (1,369,501) | (502,001) | (1,898,002) | (1,669,862) | (3,983,966) | |
| Returns on investments and servicing of finance | ||||||
| Interest received | 162,794 | 18,645 | 323,373 | 50,580 | 485,090 | |
| Interest paid | (1,509) | - | (2,066) | - | (1,924) | |
| Net cash inflow from returns on investments and servicing of finance | 161,285 | 18,645 | 321,307 | 50,580 | 483,166 | |
| Capital expenditures and financial investment | ||||||
| Purchase of intangible fixed assets | - | - | (167,737) | - | (2,732,203) | |
| Purchase of tangible fixed assets | (276,607) | (2,890) | (317,397) | (32,695) | (159,039) | |
| Sale of tangible fixed assets | - | - | - | - | 7,657 | |
| Purchase of subsidiary undertaking | - __________ |
- __________ |
(42,702) __________ |
- __________ |
(90,155) __________ |
|
| Net case outflow from investing activities | (276,607) | (2,890) | (527,836) | (32,695) | (2,973,740) | |
| Net cash outflow before use of liquid resources | (1,484,823) | (486,246) | (2,104,531) | (1,651,977) | (6,474,540) | |
| Management of liquid resources | ||||||
| Cash withdrawn from/placed on short term deposits | 1,967,992 | 650,000 | 2,133,858 | (650,000) | (15,920,740) | |
| Financing | ||||||
| Issue of ordinary share capital | 96,817 __________ |
- __________ |
208,368 __________ |
- __________ |
20,873,525 __________ |
|
| Increase/decrease in cash for the period | 579,986 | 163,754 | 237,695 | (2,301,977) | (1,521,755) | |
3 months ended 30 June 1999 Reconciliation of operating loss to net cash outflow from operating activities |
||||||
| 3 months ended 30/6/99 £ |
3 months ended 30/6/98 £ |
6 months ended 30/6/99 £ |
6 months ended 30/6/98 £ |
12 months ended 31/12/98 £ |
||
| Operating loss | (207,806) | (314,864) | (904,647) | (867,369) | (2,008,713) | |
| Depreciation | 53,674 | 11,171 | 73,703 | 22,775 | 61,875 | |
| Amortisation | 247,489 | - | 489,150 | - | 430,372 | |
| Gain on sale of fixed assets | - | - | - | - | (841) | |
| Notional charge for share options granted at less than fair value | - | 19,545 | - | 31,376 | 29,308 | |
| Increase in debtors | (2,268,627) | (697,872) | (2,942,508) | (1,117,967) | (3,417,740) | |
| Increase in creditors | 805,769 | 480,019 | 1,386,300 | 261,323 | 921,773 | |
| Net cash outflow from operating activities | (1,369,501) | (502,001) | (1,898,002) | (1,669,862) | (3,983,966) | |
| Autonomy Corporation plc Notes to the financial information |
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| 1. Basis of preparation |
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| The consolidated interim financial information has been prepared in accordance with the policies set out in the financial statements for the year ended 31 December 1998. The consolidated financial information relating to the year ended 31 December 1998 does not constitute Statutory Accounts as defined in section 240 of the Companies Act 1985, but is an extract from the latest Statutory Accounts which have been delivered to the Registrar of Companies. The audit opinions on these accounts were unqualified. The results for the three month and six month periods ended 30 June 1999 and 30 June 1998 have not been audited. |
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| 2. Segmental information |
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| 3 months ended 30/6/99 £ |
3 months ended 30/6/98 £ |
6 months ended 30/6/99 £ |
6 months ended 30/6/98 £ |
12 months ended 31/12/98 £ |
||
| Turnover by product and by country of origin | ||||||
| UK turnover | ||||||
| Knowledge management products | 633,209 | 453,657 | 976,493 | 571,447 | 1,880,462 | |
| New media content publishing products | 1,715,920 | 452,500 | 2,736,261 | 803,550 | 1,725,763 | |
| E-commerce products | 160,036 | - | 346,494 | - | - | |
| Desktop products and other | - __________ |
11,995 __________ |
- __________ |
14,920 __________ |
37,095 __________ |
|
| Total UK turnover | 2,509,165 | 918,152 | 4,059,248 | 1,389,917 | 3,643,320 | |
| US turnover | ||||||
| Knowledge management products | 419,981 | 40,650 | 911,965 | 40,650 | 353,170 | |
| New media content publishing products | 676,358 | 137,699 | 1,045,867 | 361,744 | 1,302,997 | |
| Desktop products and other | 70 __________ |
3,123 __________ |
70 __________ |
3,822 __________ |
4,370 __________ |
|
| Total US turnover | 1,096,409 | 181,472 | 1,957,902 | 406,216 | 1,660,537 | |
| Norwegian turnover | ||||||
| Knowledge management products | 37,365 | - | 37,365 | - | - | |
| New media content publishing products | 66,528 __________ |
- __________ |
168,788 __________ |
- __________ |
- __________ |
|
| Total Norwegian turnover | 103,893 | - | 206,153 | - | - | |
| Consolidated turnover | 3,709,467 | 1,099,624 | 6,223,303 | 1,796,133 | 5,303,857 | |
| 3. Earnings (loss) per share |
||||||
| Earnings (loss) per share is based on the following: |
||||||
| 3 months ended 30/6/99 £ |
3 months ended 30/6/98 £ |
6 months ended 30/6/99 £ |
6 months ended 30/6/98 £ |
12 months ended 31/12/98 £ |
||
| Profit (loss) for the financial period | 293,911 | (296,219) | 124,413 | (816,789) | (1,743,727) | |
| Weighted average number of shares | Number | Number | Number | Number | Number | |
| For basic earnings per share | 40,431,196 | 29,777,295 | 40,273,502 | 29,777,295 | 34,737,948 | |
| Exercise of share options | 1,086,322 __________ |
- __________ |
1,281,297 __________ |
- __________ |
- __________ |
|
| For diluted earnings per share | 41,517,518 | 29,777,295 | 41,554,799 | 29,777,295 | 34,737,948 | |
| In accordance with Financial Reporting Standard No 14 "Earnings per share", no potential ordinary shares have been included in the calculation of fully diluted earnings per share for the 3 and 6 months ended 30 June 1998 because they would not increase the net loss per share. | ||||||
| 4. Reconciliation to International Accounting Standards |
||||||
| The company's consolidated financial information has been prepared under UK Generally Accepted Accounting Principles ("UK GAAP"), which differ in certain respects from International Accounting Standards ("IAS"). The principal difference between UK GAAP and IAS that affects the group relates to goodwill. Under UK GAAP, goodwill arising on consolidation, for accounting periods ending before 23 December 1998 may be written off directly to reserves. IAS require such goodwill to be capitalised and amortised over its expected useful economic life. The amortisation period selected by the directors under IAS is seven years from the date of acquisition. The table below sets out the effect of this difference between UK GAAP and IAS. |
||||||
| 3 months ended 30/6/99 (unaudited) £ |
3 months ended 30/6/98 (unaudited) £ |
6 months ended 30/6/99 (unaudited) £ |
6 months ended 30/6/98 (unaudited) £ |
12 months ended 31/12/98 (audited) £ |
||
| Profit and loss account | ||||||
| Retained profit (loss) for the period under GAAP | 293,911 | (296,219) | 124,413 | (816,789) | (1,743,727) | |
| Amortisation of goodwill | (7,345) __________ |
(7,345) __________ |
(14,690) __________ |
(14,690) __________ |
(29,380) __________ |
|
| Retained profit (loss) for the period use IAS | 286,566 | (303,564) | 109,723 | (831,479) | (1,773,107) | |
| Balance Sheet |
As at 30/6/99 |
As at 30/6/98 |
As at 31/12/98 |
|||
| Net assets as reported under UK GAAP | 22,571,971 | 2,120,159 | 22,026,408 | |||
| Adjustment for unamortised goodwill | 117,513 __________ |
146,893 __________ |
132,203 __________ |
|||
| Net assets under IAS | 22,689,484 | 2,267,052 | 22,158,611 | |||
| For more information, please contact: |
|
Dr. Mike Lynch, Managing Director and CEO Dominic Johnson, Marketing Director Jonathan Spira, Chief Financial Officer AUTONOMY CORPORATION plc Tel: 0171 831 3113 (on 5/8/99) Tel: 01223 421220 (thereafter) Edward Bridges Springett FINANCIAL DYNAMICS Tel: 0171 831 3113 |
