Financial Results
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AUTONOMY CORPORATION PLC ANNOUNCES RESULTS FOR THE THIRD QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 2005

Record Results All Around; Third Quarter Revenues up 76% Year-on-Year; Third Quarter Profit Before Tax (adjusted) up 300% Year-on-Year

Autonomy's third quarter conference call will be available live at www.autonomy.com on November 3, 2005, at 9:30 a.m. GMT/4:30 a.m. EST/1:30 a.m. PST.

Cambridge, England - November 3, 2005 - Autonomy Corporation plc (LSE: AU. or AU.L), a global leader in infrastructure software, today reported financial results for the third quarter and nine months ended September 30, 2005 ahead of market consensus estimates.

Financial Highlights

  Three Months Ended Nine Months Ended
  (unaudited) (unaudited)
  Sept. 30, 2005 Sept. 30, 2004 Sept. 30, 2005 Sept. 30, 2004
Results in US$ ($'000s except per share)* $'000s $'000s $'000s $'000s
Revenues 25,450 14,483 64,465 46,136
Gross profit (adjusted)** 23,661 13,815 60,938 43,913
Gross profit margin (adjusted)** 93% 95% 95% 95%
Profit before tax (adjusted)** 4,980 1,245 13,152 5,622
Net profit (adjusted)** 3,577 1,086 9,839 4,639
 
Gross profit (IFRS)*** 23,339 13,588 60,151 43,217
Gross profit margin (IFRS) 92% 94% 93% 94%
Profit before tax (IFRS) 4,298 1,308 10,869 4,406
Net profit (IFRS) 2,869 1,020 7,542 3,466
 
EPS        
- basic (adjusted)** $ 0.03 $ 0.01 $ 0.09 $ 0.04
- diluted (adjusted)** $ 0.03 $ 0.01 $ 0.09 $ 0.04
 
- basic (IFRS) $ 0.02 $ 0.01 $ 0.07 $ 0.03
- diluted (IFRS) $ 0.02 $ 0.01 $ 0.07 $ 0.03

* Nine month results include contribution from etalk for the period from June 3, 2005 (date of completion) through September 30, 2005.

** Adjusted results exclude post-acquisition restructuring costs, loss on disposal of investments and non-cash charges, namely, the amortization of purchased intangibles, share-based compensation and non-cash translational foreign exchange gains and losses and associated tax effects. See pages 3 and 5 for further details.

*** See page 8 for discussion regarding the transition from U.S. GAAP to International Financial Reporting Standards ("IFRS") and reconciliation between IFRS and U.S. GAAP.

Nine Month 2005 Highlights

Third Quarter 2005 Highlights

Commenting on the results, Dr. Mike Lynch, Group CEO of Autonomy said today: "We are delighted to announce our record third quarter and nine month 2005 results. Consistent with our record performance in recent quarters, these results are once again driven by the adoption of our industry-leading IDOL 5.0, the latest version of our core product. We've achieved these results despite Q3 seasonally being our quietest quarter."

Dr. Lynch concluded: "The first nine months of 2005 has illustrated the high operational gearing inherent in our business model, ensuring that operating margins have surged as revenues grow with the consequential beneficial effect on our bottom line performance. The integration of our etalk acquisition is now complete and our blended gross margins have returned to normal levels. At the same time the technology integration is now complete with etalk's Qfiniti 3.0 ready to ship, and overseas expansion planned. We have also seen returns from our recent technology investments, such as the availability of our consumer Web index and a significant license of our IPTV technology to a major media group. With record results from our core business, successful integration of etalk, and the continued development of exciting opportunities for our consumer technologies, 2005 to date has been an extremely exciting time for Autonomy, and we remain confident in our long-term outlook."

Third Quarter and Nine Month 2005 Financial Highlights

Revenues for the third quarter totalled $25.5 million, up 76% from $14.5 million for the third quarter of 2004 with the first full quarter of contribution from etalk and core Autonomy growth. Of total revenues, U.S./Asia Pac revenues of $17.2 million were 68% and U.K./European revenues of $8.3 million were 32% in the third quarter of 2005. etalk's sales are primarily in the U.S., accounting for the shift from 2004 to 2005. Revenues for the nine months ended September 30, 2005, totalled $64.5 million, up 40% from $46.1 million for the nine months ended September 30, 2004.

Gross profits (adjusted) for the quarter were $23.7 million, up 71% from $13.8 million in the third quarter of 2004. Gross margins (adjusted) were 93% in the third quarter of 2005, versus 95% in the third quarter 2004. Gross profits (IFRS) for the quarter were $23.3 million, up 72% from $13.6 million in the third quarter of 2004. Third quarter gross margins (IFRS) were 92%, compared to 94% in the third quarter of 2004.

Gross profits (adjusted) for the nine months ended September 30, 2005 were $60.9 million, up 39% from $43.9 million for the nine months ended September 30, 2004. Gross margins (adjusted) were 95% in the nine months ended September 30, 2005, compared to 95% for the nine months ended September 30, 2004. Gross profits (IFRS) for the nine months ended September 30, 2005, were $60.2 million, up 39% from $43.2 million for the nine months ended September 30, 2004. Gross margins (IFRS) were 93% for the nine months ended September 30, 2005, compared to 94% for the nine months ended September 30, 2004.

Net profit (adjusted) for the third quarter of 2005 was $3.6m million, or $0.03 per diluted share, compared to net profit (adjusted) of $1.1 million, or $0.01 per diluted share, for the third quarter of 2004. Net profit (IFRS) for the third quarter of 2005 was $2.9 million, or $0.02 per diluted share, compared to net profit (IFRS) of $1.0 million, or $0.01 per diluted share, for the third quarter of 2004. Net profit (adjusted) for the nine months ended September 30, 2005, was $9.8 million, or $0.09 per diluted share, compared to net profit (adjusted) of $4.6 million, or $0.04 per diluted share, for the nine months ended September 30, 2004. Net profit (IFRS) for the nine months ended September 30, 2005, was $7.5 million, or $0.07 per diluted share, compared to net profit (IFRS) of $3.5 million, or $0.03 per diluted share, for the nine months ended September 30, 2004.

Cash balances were $75.5 million at September 30, 2005, an increase of $1.6 million from the prior quarter. Accounts receivable days sales outstanding (DSOs) decreased to 102 days for the third quarter of 2005, compared to 115 days for the previous quarter. Receivables for the third quarter of 2005 were $28.2 million, compared to $17.6 million for the third quarter of 2004. Deferred revenues were at $17.3 million net at September 30, 2005, compared with $5.6 million net at September 30, 2004. During the quarter Autonomy did not purchase any shares for cancellation. In total, Autonomy has purchased for cancellation 20,997,824 shares at an average price of £1.65 per share.

Although IFRS 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 and operating profits without giving effect to certain specific charges. Consequently, the non-IFRS (adjusted) results exclude post-acquisition restructuring costs, loss on disposal of investments and non-cash charges, namely, the amortization of purchased intangibles, share-based compensation and non-cash translational foreign exchange gains and losses and associated tax effects. Management uses the adjusted results to assess the financial performance of Autonomy's core business.

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 wins included: Adobe, Fedex, Turkcel, Martha Stewart Living and Cisco. Repeat business from existing customers accounted for approximately 31% of revenue for the quarter, and included customers such as BAE, General Motors, Forbes, Johnson & Johnson, ABN Amro, White & Case and Banco de Espana, various U.S. Federal government agencies, such as the continuation of our standard status at the U.S. Department of Homeland Security, as well as to Stratcom/CSC, the U.S. Library of Congress and the U.S. National Archive, and various governmental and intelligence agencies across the globe including in Singapore, France and Hungary.

Strategic Partnerships and OEMs

Autonomy's OEM Program continued to grow during Q3 with revenues up 12% year-on-year, with OEM-derived revenues of $3.0 million accounting for approximately 12% of revenues, compared to $2.7 million for the third quarter of 2004, and new OEM agreements with major software companies including Vignette and Unigraphics.

Corporate Developments

During the third quarter of 2005 Autonomy announced an upgrade to its existing mobile search technology, IDOL Mobile. IDOL Mobile brings the power of Autonomy's enterprise technology to wireless devises, providing the core technology that allows some of the world's most innovative mobile telecommunication carriers to deliver targeted multimedia content ranging from videos and ring tones to e-commerce product suggestions to consumers on the move.

Also during the third quarter of 2005 Autonomy's etalk division, an innovative provider of contact center quality management, speech analytics software and services, announced the newest release of Qfiniti. Qfiniti Enterprise is the industry's first unified call recording, agent evaluation, and advanced speech analytics solution for the growing contact center market. This solution delivers a scalable and centrally managed enterprise platform that allows international, multi-site customer service operations to effectively monitor, measure, improve and understand relevant customer interactions.

During the third quarter of 2005 Autonomy announced a significant expansion of its operations in Europe focused on the emerging economic growth in Germany. As part of the expansion Autonomy acquired all outstanding shares of global linxs Gmbh. The expanded operations include approximately 16 exceptionally skilled employees who significantly enhance Autonomy's presence in Germany and its resources worldwide.

Finally, Autonomy continues to be recognized for its industry leadership position. Autonomy was recently once again positioned by independent research firm Gartner, Inc. in the leader quadrant in Gartner's 2005 Information Access Technology Magic Quadrant report. According to Gartner, vendors listed in the leader's quadrant are performing well today, have a clear vision of market direction and are actively building competencies to sustain their leadership position in the market. Autonomy's IDOL Server was also recently selected as one of KMWorld Magazine's "Trend-Setting Products of 2005." Autonomy client Merseybio was also recently lauded by Forrester Research for their use of Autonomy's innovative technology for creating an online network and virtual office space, where local client firms, medical centers, researchers and universities can work in partnership.

About Autonomy Corporation plc

Autonomy Corporation plc (LSE: AU. or AU.L) is a global leader in infrastructure software for the enterprise. Autonomy's technology powers applications dependent upon unstructured information including call center, customer relationship management, knowledge management, enterprise portals, enterprise resource planning, online publishing and security applications.

Autonomy's customer base comprises more than 1,000 global companies and organizations including, among others, BAE Systems, Ford, Ericsson, Shell, Nestle, AOL, BBC, Reuters, Hutchison 3G, Royal Sun Alliance, Sun Microsystems, Philips, Boeing, Vodafone, Schneider Electric, Coca Cola, GlaxoSmithKline, Citigroup, ABN AMRO, Deutsche Bank, Nomura, the New York Stock Exchange, Daimler Chrysler, Kraft Foods, Lloyds TSB, the U.S. Department of Homeland Security, the U.S. Securities and Exchange Commission, NASA and the U.S. Department of Energy. Strategic reseller and OEM partners include leading companies such as BEA, Business Objects, Citrix, EDS, IBM Global Services, Novell, Veritas, Vignette, Supportsoft and Sybase. The company has offices worldwide.

The Autonomy Group includes: Aungate, a leader in technology for Real-Time Enterprise Governance; Virage, a leading provider of rich media communication and content management software; and etalk, a leading provider of enterprise-class contact center products.

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

Download the full Adobe Acrobat version of the Q3 2005 Report (PDF)

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