News

AUTONOMY CORPORATION PLC ANNOUNCES RESULTS FOR SECOND QUARTER ENDED JUNE 30, 2001

Adjusted Second Quarter EPS is $0.02 Per Diluted Share

Autonomy's second quarter conference call will be available live on the World Wide Web at http://www.autonomy.com/ on Thursday, July 26, 2001 at 9:30 a.m. BDT/4:30 a.m. EDT/1:30 a.m. PDT

SAN FRANCISCO, California and CAMBRIDGE, England - July 26, 2001 - Autonomy Corporation plc (Nasdaq: AUTN, LSE: AU., Nasdaq Europe: AUTN), a global leader in infrastructure software for the extended enterprise, today reported financial results for the second quarter ended June 30, 2001.

Financial Highlights

	Three Months Ended			Six Months Ended
	(unaudited)
Results in US$	June 30, 2001	March 31, 2001	June 30, 2000	June 30, 2001	June 30, 2000
($000's except per share)
Revenues	$ 14,192	$ 14,658	$ 14,624	$ 28,850	$ 26,326
Gross profit	$ 13,839	$ 13,944	$ 13,226	$ 27,783	$ 24,152
Gross profit margin	98%	95%	90%	96%	92%
Profit before income tax	$ 2,235	$ 8,793	$ 5,092	$ 11,028	$ 5,532
Net profit	$ 1,540	$ 5,721	$ 3,385	$ 7,261	$ 3,731
Adjusted Earnings per share*⁺
- basic	$0.02	$0.01	$0.02	$0.03	$0.02
- diluted	$0.02	$0.01	$0.02	$0.03	$0.02

* All share information reflects a 3-for-1 stock split effective August 1, 2000.

⁺ Adjusted EPS excludes translational foreign exchange gains and losses and associated tax effects.

Second Quarter Corporate Highlights

Margins remain high; gross profits at 98%
Company remains profitable despite difficult trading conditions
OEM program grows with seven new partners including an expanded relationship with Vignette to embed technology in new core product
Blue chip second quarter contract wins including Babcock, Boeing, Eastman Kodak, Ingersoll-Rand, Infineon, Philips and VoiceStream
Balance sheet remains strong with approximately $137 million in cash
Company unveils Dremedia™, targeting the digital and interactive television sectors
Company appoints senior LASMO plc executive, Sushovan Hussain, as new Chief Financial Officer

Commenting on the results, Mike Lynch, group CEO of Autonomy said, "In the face of challenging market conditions, we are pleased to report second quarter results in line with consensus market expectations. Revenues during the quarter were driven by new wins in Europe and the United States and an expanding stream of OEM royalty revenues. Our business model continues to demonstrate its scalability and efficiency with gross margins at 98%. While visibility remains limited, we are seeing some improvement. Our cash-rich balance sheet, profitability and efficient business model provides us with the financial flexibility to expand our operations while others are scaling back."

Dr. Lynch continued, "A key growth driver for Autonomy is our ability to expand the applicability of our software into new markets. Today we unveiled our acquisition of Dremedia™, which will target the fast growing digital and interactive television sector. Digital interactive video, tools and services are all applications which rely heavily on the interaction of unstructured data in video, voice and text. With our Dynamic Reasoning Engine™ (DRE) at its core, Dremedia will focus on offering a wide range of applications to the broadcast, technology and interactive television markets. We are pleased to report that the BBC has already signed on as Dremedia's first client in this area.

Our pipeline is strong, and demand for our core products remains strong. In particular, the continental European market strengthened during the second quarter, and the US remains stable, while at the same time the larger deals are starting to close again. On this basis, our visibility is improving, but at the same time still remains low."

Second Quarter Financial Highlights

Revenues for the second quarter totalled $14.2 million, down 3% from $14.6 million for the second quarter of 2000 and down 3% from $14.7 million for the first quarter of 2001. U.S. revenues totalling $6.8 million were 48% of total revenues in the second quarter of 2001. U.K./European revenues totalling $7.1 million were 50% of total revenues in the second quarter of 2001.

Gross profits for the quarter were $13.8 million, up 5% from $13.2 million in the second quarter of 2000 and down 1% from $13.9 million in the first quarter of 2001. Second quarter gross margins were 98%, compared to 90% in the second quarter of 2000 and compared to 95% in the first quarter of 2001.

Adjusted net income for the second quarter of 2001 was $2.1 million, or $0.02 per diluted share, compared to adjusted net income of $1.6 million, or $0.01 per diluted share, for the first quarter of 2001. Adjusted net income excludes translational foreign exchange gains and losses and associated tax effects for all periods. Net income for the second quarter of 2001 was $1.5 million, or $0.01 per diluted share, compared to net income of $3.4 million or $0.03 per diluted share for the second quarter of 2000, and compared to net income of $5.7 million, or $0.04 per diluted share, for the first quarter of 2001.

Cash and cash equivalents totalled $137.3 million at June 30, 2001, compared to a balance of $143.8 million at March 31, 2001. The decrease in cash and cash equivalents was primarily due to part payment of 2000 tax liabilities of $3 million and translational exchange effects.

Receivables for the second quarter were $15.3 million compared to $14.1 million for the first quarter of 2001. Deferred revenues were $8.2 million gross ($3.6 million net) at June 30, 2001, compared with $8.8 million gross ($5.1 million net) at March 31, 2001.

Product Sales

Autonomy's infrastructure technology has been adopted by enterprises, new media and e-commerce clients to process information across all internal and external data sources. During the quarter, major contract wins included: Babcock, Boeing, Centradia, Infineon, Ingersoll Rand, Eastman Kodak, Johnson & Johnson, the U.S. Department of Labor and VoiceStream. Repeat business from existing customers such as, Hewlett Packard, Philips and General Motors, accounted for approximately 30% of revenue for the quarter.

Strategic Partnerships and OEMs

Autonomy's OEM Program continues to progress according to plans with the addition of seven new OEMs, including an expanded relationship with Vignette to embed Autonomy's technology within its new core product. Total OEM revenues for the second quarter of 2001 were $1.9 million up 12% from $1.7 million in the first quarter of 2001. Ongoing OEM royalty revenues for the second quarter of 2001 were $654,000 compared to $674,000 during the first quarter of 2001. In addition, Autonomy signed on new reseller partners including Cap Gemini Ernst & Young in the Netherlands.

Corporate Developments

Autonomy unveiled today Dremedia, which will extend Autonomy's infrastructure technology to automating unstructured content such as video and audio for interactive television and broadcast purposes.

Autonomy also announced that effective today Sushovan Hussain has been appointed as the company's new Chief Financial Officer, bringing with him more than 15 years of public company finance and management experience. Mr. Hussain joins the company from LASMO plc, one of the world's largest oil and gas exploration companies which was acquired by Eni in early 2001, and where he held a number of senior international financial positions, including three years in the Corporate Development department, charged with acquisitions and divestments. Mr. Hussain, 37, received his BA in Economics from Cambridge University, England, and became a Qualified Chartered Accountant while practicing at Ernst & Young in London.

Mr. Hussain replaces Ralph Harms, former Chief Financial Officer, who continues to serve Autonomy in an advisory capacity. Mr. Harms has stepped down from his position as Chief Financial Officer and will no longer serve as a Director of Autonomy Corporation plc.

In addition, Dominic Johnson has been appointed Marketing Director of Dremedia, and accordingly is moving from his position as Marketing Director and a board member of Autonomy. Richard Wilson of Apax Partners, founding investor in Autonomy, will also be stepping down from Autonomy's board as Apax is no longer a major shareholder. At the request of the board of directors, John McMonigall will continue on in his role as the senior non-executive member of the board.

About Autonomy Corporation plc

Autonomy Corporation plc (Nasdaq: AUTN; LSE: AU.; Nasdaq Europe: AUTN) is a global leader in infrastructure software for the enterprise. Autonomy's technology powers applications dependent upon unstructured information including: e-commerce, customer relationship management, knowledge management, enterprise information portals, enterprise resource planning and online publishing. Autonomy's customer base includes more than 450 global companies, including Astra Zeneca, British Aerospace, Clorox, Deutsche Bank, Ericsson, General Motors, Lucent, Royal Sun Alliance, Sun Microsystems and public sector agencies including the United States Department of Defense, NASA and the United States Department of Energy. Strategic reseller and OEM partners include leading companies such as BEA, Business Objects, Hewlett Packard, IBM Global Services, Oracle, Vignette and Sybase. The company has offices in North America, Europe, Asia and Australia and is on the Web at http://www.autonomy.com/.

With the exception of historical information, the matters set forth in this news release are forward-looking statements that involve risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statements. These factors include, among others, technology risks, including dependence on core technology; fluctuations in quarterly results; dependence on new product development; rapid technological and market change; reliance on sales by others; management of growth; dependence on key personnel; rapid expansion; growth of the Internet; financial risk management; and future growth subject to risks. These factors and other factors which could cause actual results to differ materially are also discussed in the company's filings with the United States Securities and Exchange Commission, including Autonomy's Registration Statements on Form F-1.

Autonomy and the Autonomy logo are registered trademarks or trademarks of Autonomy Corporation plc. All other trademarks are the property of their respective owners.

Financial Media Contacts:	Analyst and Investor Contacts:
Kris Marubio, Director of Public Relations Autonomy Corporation plc +1 (415) 350-7339	Sushovan Hussain, Chief Financial Officer Autonomy Corporation plc +44 (0) 1223 448 000
Ann Travers Brainerd Communicators, Inc. +1 (212) 986-6667 +1 (917) 687-6263 (mobile)	John Buckley Brainerd Communicators, Inc. +1 (212) 986-6667 +1 (917) 543-3622 (mobile)
Alastair Hetherington/Edward Bridges Financial Dynamics +44 (0)20 7831 3113	Edward Bridges/Alastair Hetherington Financial Dynamics +44 (0)20 7831 3113

AUTONOMY CORPORATION plc

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

	Three Months Ended (unaudited)			Six Months Ended (unaudited)
	June 30, 2001	March 31, 2001	June 30, 2000	June 30, 2001	June 30, 2000
Revenues	$ 14,192	$ 14,658	$ 14,624	$ 28,850	$ 26,326
Cost of revenues	353	714	1,398	1,067	2,174
Gross profit	13,839	13,944	13,226	27,783	24,152
Operating expenses (income):
Research and development	1,848	2,000	1,483	3,848	3,278
Sales and marketing	8,302	9,085	7,289	17,387	14,711
General and administrative	2,046	2,436	1,542	4,482	2,948
Provision for doubtful accounts	2	(506)	722	(504)	969
Total operating expenses	12,198	13,015	11,036	25,213	21,906
Profit from operations	1,641	929	2,190	2,570	2,246
Share of earnings (loss) of associated company and minority interest	34	38	(39)	72	(57)
Interest income, net	1,594	1,896	1,162	3,490	1,416
Gain (loss) on foreign exchange	(756)	5,930	1,779	5,174	1,927
Other non-operating expenses	(278)	-	-	(278)	--
Profit before income taxes	2,235	8,793	5,092	11,028	5,532
Provision for income taxes	695	3,072	1,707	3,767	1,801
Net profit	$ 1,540	$ 5,721	$ 3,385	$ 7,261	$ 3,731
Basic earnings per share (1)	$0.01	$0.05	$0.03	$0.06	$0.03
Diluted earnings per share (1)	$0.01	$0.04	$0.03	$0.05	$0.03
Weighted average ordinary shares outstanding (1)	127,024	126,997	123,957	127,080	123,801
Weighted average ordinary shares outstanding, assuming dilution (1) ...	134,192	131,885	131,022	133,521	130,196

All share and per share data reflect a 3-for-1 stock split effective August 1, 2000.

AUTONOMY CORPORATION plc

CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	As at (unaudited)
	June 30, 2001	March 31, 2001	June 30, 2000
ASSETS
Current assets:
Cash and cash equivalents	$ 137,301	$ 143,814	$ 127,768
Accounts receivable, net of allowances for doubtful accounts of $2,040, $2,119 and $2,919 as of June 30, 2001, March 31, 2001, and June 30, 2000, respectively	15,338	14,078	10,380
Prepaid expenses and other current assets	2,164	1,772	4,017
Total current assets	154,803	159,664	142,165
Property and equipment	3,430	2,923	1,780
Less accumulated depreciation	(1,283)	(1,103)	(648)
Property and equipment, net	2,147	1,820	1,132
Intangible assets, net	259	616	1,610
Goodwill, net	4,533	4,740	1,474
Other investments, cost	1,866	2,074	2,045
TOTAL ASSETS	$ 163,608	$ 168,914	$ 148,426

LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$ 1,124	$ 1,761	$ 3,113
Taxes payable, including corporation tax	4,975	7,381	1,682
Accrued expenses and other liabilities	5,760	6,705	6,474
Deferred revenue	3,577	5,122	4,991
Total current liabilities	15,436	20,969	16,260
Minority interest	(119)	(87)	-
Shareholders' equity:
Ordinary shares (1)	661	660	651
Additional paid-in capital	158,408	158,195	149,959
Accumulated profit / (deficit)	1,091	(449)	(16,467)
Other accumulated comprehensive income	(11,869)	(10,374)	(1,977)
Total shareholders' equity	148,291	148,032	132,166
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$ 163,608	$ 168,914	$ 148,426

(1) All share and per share data reflect a 3-for-1 stock split effective August 1, 2000. At June 30, 2001, 600,000,000 ordinary shares of nominal value 1/3 pence each authorized, 127,215,363 issued and outstanding; at March 31, 2001, 600,000,000 ordinary shares of nominal value 1/3 pence each authorized, 127,136,495 issued and outstanding; at June 30, 2000, 600,000,000 ordinary shares of nominal value 1/3 pence each authorized, 125,235,219 issued and outstanding.

AUTONOMY CORPORATION plc

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

	Three Months Ended (unaudited)			Six Months Ended (unaudited)
	June 30, 2001	March 31, 2001	June 30, 2000	June 30, 2001	June 30, 2000
Cash flows from operating activities:
Net profit	$ 1,540	$ 5,721	$ 3,385	$ 7,261	$ 3,731
Adjustments to reconcile net profit to net cash, provided by (used in) operating activities:
Depreciation and amortization	704	696	644	1,400	1,186
Minority interest in loss of consolidated subsidiaries	(34)	(38)	-	(72)	-
Write-off of investment	278	-	-	278	-
Provision for doubtful accounts	(61)	(1,359)	722	(1,420)	969
Share-based compensation	-	(197)	26	(197)	60
Foreign currency movements	756	(5,930)	(1,779)	(5,174)	(1,927)
Share of earnings of associated company	-	-	39	-	57
Changes in operating assets and liabilities:
Accounts receivable	(2,239)	9,598	3,523	7,755	(1,404)
Prepaid expenses and other current assets	(689)	(524)	(1,313)	(1,019)	(1,939)
Deferred revenues	(583)	(1,475)	(1,189)	(2,058)	1,888
Accounts payable	(624)	(445)	1,290	(1,069)	1,423
Accrued expenses and other liabilities	(3,012)	1,680	(1,024)	(1,922)	2,455
Net cash provided by operating activities.........	(3,964)	7,727	4,324	3,763	6,499

Cash flows from investment activities:
Purchase of equipment	(531)	(774)	(223)	(1,305)	(477)
Purchase of intangibles	(5)	(52)	-	(57)	(15)
Purchase of investments	-	(95)	(874)	(95)	(874)
Net cash used in investing activities	(536)	(921)	(1,097)	(1,457)	(1366)

Cash flows from financing activities:
Proceeds from issuance of shares, net of issuance costs	214	435	100,165	649	100,241
Net cash provided by financing activities	214	435	100,165	649	100,241
Effect of foreign exchange on cash and cash equivalents	(2,227)	(917)	1,779	(3,144)	1,927
Net increase in cash and cash equivalents	(6,513)	6,324	105,171	(189)	107,301
Beginning cash and cash equivalents	143,814	137,490	22,597	137,490	20,467
Ending cash and cash equivalents	137,301	143,814	127,768	137,301	127,768

Supplemental disclosure of cash flow information:
Cash received (paid) for:
Interest, net	$ 1,594	$ 2,133	$ 752	$ 3,727	$ 1,006
Income taxes	$ (2,953)	$ (260)	$ (113)	$ (3,213)	$ (113)

AUTONOMY CORPORATION plc

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED

1. Basis of presentation

The accompanying consolidated financial statements of Autonomy Corporation plc ("Autonomy" or "the Company") have been prepared in conformity with United States generally accepted accounting principles, consistent in all material respects with those applied in the Company's financial statements for the year ended December 31, 2000, included in the Company's Annual Report on Form 20-F filed with the United States Securities and Exchange Commission although the consolidated financial statements do not include all information and footnotes required by US GAAP. The quarterly information is unaudited, but reflects all normal adjustments which are, in the opinion of management, necessary to provide a fair statement of results and the Company's financial position for and as at the periods presented. The results of operations for the three and six months ended June 30, 2001, are not necessarily indicative of the operating results for the full fiscal year or future operating periods. The interim financial statements should be read in connection with the audited consolidated financial statements and the notes thereto for the year ended December 31, 2000, and the risk factors as set forth in the Form 20-F. The financial information set out above does not comprise the Company's statutory accounts. Statutory accounts for the financial year ended December 31, 2000, have been delivered to the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain any statement under section 237(2) or (3) of the Companies Act 1985.

2. Segment information

	Three Months Ended (unaudited)
	June 30, 2001	March 31, 2001	June 30, 2000
Revenue by country:
U.S.	$ 6,773	$ 7,497	$ 7,497
U.K./Europe	7,110	7,089	7,127
Rest of World	309	72	-
Total	$ 14,192	$ 14,658	$ 14,624

3. Acquisition of Autonomy Nordic

In October 2000, the Company acquired the remaining 66.66% of Autonomy Nordic AS, one of its Value Added Resellers, for aggregate consideration of $4.3 million in the form of 82,873 of the Company's ordinary shares. As a result of the acquisition, Autonomy Nordic AS has become a wholly owned subsidiary of Autonomy Corporation plc. The net goodwill arising from this and the original purchase is approximately $4.5 million, and is being amortized over a period of ten years.

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