News

AUTONOMY CORPORATION PLC ANNOUNCES RESULTS FOR THE SECOND QUARTER AND SIX MONTHS ENDED JUNE 30, 2003

Fourteenth Consecutive Quarter of Profitability; Revenues and Net Profits Increase Quarter-on-Quarter and Year-on-Year; Adjusted Net Profits up 95% on Q1 2003

Autonomy's second quarter conference call will be available live on the World Wide Web at www.autonomy.com on Wednesday, July 23, 2003 at 9:30 a.m. BDT/4:30 a.m. EDT/1:30 a.m. PDT

SAN FRANCISCO, California and CAMBRIDGE, England - July 23, 2003 - 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 and six months ended June 30, 2003.

Financial Highlights

	Three Months Ended
	(unaudited)
Results in US$	June 30, 2003	March 31, 2003	June 30, 2002
($000's except per share)
Revenues	$ 12,954	$ 11,955	$ 12,171
Gross profit	$ 12,535	$ 11,518	$ 11,886
Gross profit margin	97%	96%	98%
Net profit (GAAP)	$ 1,449	$ 1,329	$ 1,192
Net profit (adjusted)*	$ 1,654	$ 850	$ 1,545
Profit before tax (GAAP)	$ 1,749	$ 1,958	$ 340
Profit before tax (adjusted)*	$ 2,042	$ 1,274	$ 696
EPS
- basic	$ 0.01	$ 0.01	$ 0.01
- diluted	$ 0.01	$ 0.01	$ 0.01

* Adjusted net profit and adjusted profit before tax exclude translational foreign exchange gains and losses, impairment of equity investments and associated tax effects for all periods (see page 3).

Second Quarter 2003 Corporate Highlights

Adjusted net profits up 95% on Q1 2003; adjusted pre-tax profits up 60% on Q1 2003
Operating profits up nearly 7x from Q1 2003
Revenues and profits in line with consensus
Q2 2003 revenues and net profits increase from Q1 2003 and Q2 2002
Fourteenth consecutive quarter of profitability
Profit before tax for Q2 2003 is $1.7 million
R&D investment continues with spending up 12% from Q1 2003 and 24% from Q2 2002
Launch of AungateTM compliance applications
Gross margins remain high at 97%
Blue chip Q2 2003 wins include Philips, Fiat, General Motors, the Bank of England, the Swedish Government, Entergy, Capital Radio, BDO Stoy Hayward, Verbatim and various U.S. Federal government agencies
OEM program performed well, with five contracts including agreements with Veritas and EDS
Average contract size remains stable at approximately $330,000
Deferred revenue at highest level in three years at $5.1 million, reflecting strong renewals
Strong balance sheet with approximately $120 million in cash

Commenting on the results, Dr. Mike Lynch, Group CEO of Autonomy said today: "We are pleased to announce that our second quarter 2003 results are in-line with market expectations. During a period of general uncertainty, Autonomy's strong performance has allowed us to announce that sales and profits each increased quarter-on-quarter and from Q2 2002, and that Q2 2003 was our fourteenth consecutive quarter of profitability. In the second quarter our award-winning technology was selected by new and existing blue chip customers in a wide variety of industries throughout the world including Philips, Fiat, General Motors, the Bank of England, the Swedish Government, Entergy, Capital Radio, BDO Stoy Hayward and Verbatim and various U.S. Federal government agencies. Our OEM business performed particularly well, including agreements with Veritas and EDS. Our average contract size remained stable at $330,000 as companies continue to recognize the business benefits of our automated infrastructure."

Dr. Lynch continued, "Throughout 2002 and the first half of 2003, Autonomy has continued to increase its investment in R&D up some 12% from last quarter and 24% from a year ago. During the second quarter of 2003 we announced AungateTM, a division of Autonomy offering the world's first automated, solution for enterprise compliance and litigation support. Earlier this month we announced an agreement to acquire Virage, Inc., a leading provider of video and rich media software. The transaction was applauded by independent analysts such as AMR Research who stated that "[Autonomy is] a company that never fails to impress us with its own innovation" and that "Virage gives [Autonomy] a bigger stake in an emerging market opportunity." We believe that the addition of the Autonomy and Dremedia technologies into Virage's award-winning products will enable existing and prospective customers to maximize their return-on-investment in video and easily integrate it within the larger enterprise infrastructure. The transaction is expected to be completed late in the third quarter of 2003. Autonomy's consistent profitability has enabled the company to take advantage of the current special opportunities by investing for the future."

Second Quarter and Six Month 2003 Financial Highlights

Revenues for the second quarter totalled $13.0 million, up 8% from $12.0 million for the first quarter of 2003, and up 6% from $12.2 million for the second quarter of 2002. U.S./Asia Pac revenues of $6.4 million were 49% of total revenues and U.K./European revenues totalling $6.6 million were 51% of total revenues in the second quarter of 2003. Revenues for the six months ended June 30, 2003 totalled $24.9 million, down 5% from $26.2 million for the six months ended June 30, 2002.

Gross profits for the quarter were $12.5 million, up 9% from $11.5 million in the first quarter of 2003, and up 5% from $11.9 million in the second quarter of 2002. Second quarter gross margins were 97%, compared to 96% in the first quarter of 2003 and compared to 98% in the second quarter of 2002. Gross profits for six months ended June 30, 2003, were $24.1 million, down 7% from $25.8 million for the six months ended June 30, 2002. Gross margins for the six months ended June 30, 2003, were 97%, compared to 98% for the six months ended June 30, 2002.

Net profit (adjusted) for the second quarter of 2003 was $1.7 million (GAAP- $1.4 million), or $0.01 per diluted share (adjusted and GAAP), compared to net profit (adjusted) of $0.9 million (GAAP- $1.3 million), or $0.01 per diluted share (adjusted and GAAP), for the first quarter of 2003 and compared to net profit (adjusted) of $1.5 million (GAAP- $1.2 million) or $0.01 per diluted share (adjusted and GAAP), for the second quarter of 2002. Adjusted net profit excludes translational foreign exchange gains and losses, impairment of equity investments and associated tax effects for all periods. Net profit for the six months ended June 30, 2003, was $2.8 million, or $0.02 per diluted share, compared to net profit of $4.6 million, or $0.04 per diluted share, for the six months ended June 30, 2002.

Cash balances were $120.3 million at June 30, 2003, a slight decrease from the prior quarter reflecting share repurchases and exceptional pre-payments during the quarter such as annual directors and officers insurance renewals and new marketing programs. During the quarter Autonomy continued its share repurchase program, purchasing for cancellation 2,613,593 shares at an average price of £1.73 per share. In total, Autonomy has purchased for cancellation 15,254,644 shares at an average price of £1.51 per share.

Despite strong cash collection, accounts receivable days sales outstanding were 136 days for the second quarter of 2003, compared to 134 days for the first quarter of 2003, primarily due to general delays in payment by a European government customer for a significant transaction. Receivables for the second quarter of 2003 were $19.6 million compared to $17.8 million for the first quarter of 2003, and compared to $16.8 million for the second quarter of 2002. Deferred revenues were $9.0 million gross ($5.1 million net) at June 30, 2003, compared with $9.2 million gross ($4.8 million net) at March 31, 2003, and compared with $7.6 million gross ($3.2 million net) at June 30, 2002. The increase in deferred revenues reflects strong support and maintenance renewals.

Although GAAP disclosure provides investors and management with an overall view of Autonomy's financial performance, Autonomy believes that it is important for investors to also understand the performance of Autonomy's core business, such as the sale of its software products and services. Consequently, the adjusted results exclude charges not reflective of Autonomy's core ongoing operational business, namely, translational foreign exchange gains and losses, impairment of equity investments and associated tax effects. Management uses the adjusted results to assess the financial performance of Autonomy's core business. A reconciliation of adjustments to GAAP is set forth in the tables at the end of this press release.

Product Sales

Autonomy's infrastructure technology has been adopted by enterprises to process information across all internal and external data sources. During the quarter, major new customer wins included: the Bank of England, the Swedish Government, BDO Stoy Hayward, Texas Online, Verbatim and Singapore Polytechnic. Repeat business from existing customers accounted for approximately 32% of revenue for the quarter, and included customers such as Philips, Fiat, the BBC and General Motors, as well as various U.S. Federal government agencies, such as various intelligence agencies and the United States Navy.

Strategic Partnerships and OEMs

Autonomy's OEM Program continued on track during the second quarter, with five contracts, including agreements with Veritas and EDS. OEM-derived revenues for the second quarter of 2003 of $2.4 million accounted for approximately 18% of revenues, compared to $2.2 million for the first quarter of 2003.

Q2 Corporate Developments

During the second quarter of 2003 Autonomy launched Aungate, a division of Autonomy offering the world's first automated, solution for enterprise compliance and litigation support. Founded on Autonomy's unique Intelligent Data Operating Layer (IDOL), Aungate provides a technology platform that integrates with enterprise communications technologies to power real-time analysis of telephone calls, emails and instant messages. Aungate's technology has been tailored to specifically help facilitate compliance and governance discovery and analysis processes, which are now being legislated by the Sarbanes-Oxley Act of 2002, and recommended by the Basel II Accord. Aungate technology will also help to rapidly address the challenges faced within the 80% of financial institutions that do not yet meet existing SEC compliance regulations. Aungate provides an integrated solution to automate the analysis of these unstructured information sources in real time, enabling executives to spot trends in communications and easily pinpoint potential information misuse.

Also during the second quarter of 2003 Autonomy announced the appointment of two new members to its board of directors and a new chairman to its audit committee. Mark Opzoomer, European managing director and regional vice-president of Yahoo!, joined the board as a non-executive director and will serve as Chairman of Autonomy's Audit Committee. Sushovan Hussain, Chief Financial Officer of Autonomy Corporation plc since June 2001, joined the Board as an executive director.

Finally, during the quarter Autonomy was again recognized for its market leadership and unmatched technology. In April 2003, Gartner, Inc., an independent research firm, listed Autonomy as a leader in the Gartner 2003 Enterprise Search Engine Vendor Magic Quadrant.

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 customer relationship management, knowledge management, enterprise portals, enterprise resource planning, online publishing and security applications. Autonomy's customer base includes more than 600 global organizations including AstraZeneca, BAE Systems, Ford, Ericsson, Hutchison 3G, RoyalSunAlliance, Sun Microsystems and public sector agencies including the US Department of Defense, NASA and the US Department of Energy, as well as the UK Government's Department of Trade and Industry and numerous agencies responsible for homeland security related functions. Strategic reseller and OEM partners include leading companies such as ATG, BEA, Business Objects, Computer Associates, Hewlett Packard, IBM Global Services, Vignette, EDS and Sybase. Autonomy has offices worldwide and is on the Web at www.autonomy.com.

Caution Concerning Forward-Looking Statements

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 latest Annual Report on Form 20-F.

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:
Ian Black, Director of Corporate Communications Autonomy Corporation plc +44 (0)1223 448 000	Sushovan Hussain, Chief Financial Officer Autonomy Corporation plc +44 (0)1223 448 000
Edward Bridges Financial Dynamics +44 (0)20 7831 3113	Edward Bridges Financial Dynamics +44 (0)20 7831 3113

Download the full Adobe Acrobat version of the Q2 2003 Report (PDF)