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AUTONOMY CORPORATION...

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AUTONOMY CORPORATION...

AUTONOMY CORPORATION PLC ANNOUNCES RESULTS FOR THE FOURTH QUARTER AND TWELVE MONTHS ENDED DECEMBER 31, 2008

Record Quarterly and Annual Results Ahead of Expectations with Highest Revenues and Profits in Autonomy's History; Full Year Revenues up 47% to record $503.2 million; Full Year Profit from Operations (adjusted)* up 91% to record $207.5 million; Record Operating Margins at 50% in Q4'08

Autonomy's fourth quarter conference call will be available live at www.autonomy.com on January 21, 2009, at 9:00 a.m. BST/4:00 a.m. EST/1:00 a.m. PST.

Cambridge, England – January 21, 2009 – Autonomy Corporation plc (LSE: AU. or AU.L), a global leader in infrastructure software, today reported financial results for the fourth quarter and twelve months ended December 31, 2008.

Financial Highlights

* Adjusted results exclude the share of loss of associates, post-acquisition restructuring costs and non-cash charges, namely the amortization of purchased intangibles, share-based compensation, impairment of investments and non-cash translational foreign exchange gains and losses and associated tax effects. See reconciliations on page 5.

Twelve Month 2008 Highlights

Fourth quarter 2008 Highlights

Commenting on the results, Dr. Mike Lynch, Group CEO of Autonomy said today: "2008 was another momentous year for Autonomy, with exceptional results in all areas including strong organic growth. Top line revenues, operating profits, bottom line profit before tax and EPS are all up significantly, well ahead of consensus expectations from the beginning of the year and far-and-away records for the company, despite the negative effects of foreign exchange on revenues. These strong results occurred despite an unfavourable and unexpected change in FX. During the quarter our backlog also remained stable. Throughout 2008 we received accolades and top ratings in multiple new areas, whilst being declared the winner of the enterprise search wars."

Dr. Lynch continued: "The fundamental driver for Autonomy is the explosion of unstructured information. This change for the IT industry affects all areas and Autonomy's unique ability to understand meaning gives it a unique driver. Whilst this switch to unstructured information may take ten to fifteen years, in 2008 we saw two particular aspects of this bigger picture come to the fore. The first and most important of these which affects all industry sectors are regulatory changes such as the amendments to the U.S. Federal Rules of Civil Procedure. The second of these effects was the increase in regulation and litigation in the financial markets as a result of recent turmoil. As regulators across the world have realized that most of their issues are found in the unstructured information we saw a raft of new regulations come in during 2008 and the announcement of new regulations which will become operative in 2009 and 2010."

Dr. Lynch continued: "2008 saw a series of significant technical developments in the company, including a new architecture for Autonomy ZANTAZ Digital Safe, increasing efficiency by a factor of eight and introducing new functionality; the integration of IDOL and Meridio to produce a significant advance in the field of manage-in-place; and continuing demands for Autonomy's industry-leading voice archiving, critical for the emergence of audio EDD."

Dr. Lynch concluded: "We continue to monitor the market situation closely and the incoming evidence confirms our previous assumptions leading us to be conservatively optimistic for the remainder of 2009."

Fourth Quarter and Twelve Month Financial Highlights

Revenues for the fourth quarter of 2008 totalled $145.4 million, up 26% from $115.1 million for the fourth quarter of 2007 driven by strong organic growth. In the fourth quarter of 2008, Americas revenues of $95.7 million represented 66% of total revenues, and Rest of World revenues of $49.7 million represented 34% of total revenues. Revenues for the twelve months ended December 31, 2008, totalled $503.2 million, up 47% from $343.4 million for the twelve months ended December 31, 2007.

Organic growth for the fourth quarter of 2008 was strong at 29%. Calculation of organic growth takes into account the pre-acquisition stub period for Meridio (completed on November 8, 2007). Meridio revenues for the period from October 1 to November 8, 2007 were $0.5 million. There were no other acquisitions in the period. Organic license growth was 33%, and increase in IDOL sales over the year was 26%.

Gross profits (adjusted) for the fourth quarter of 2008 were $133.1 million, up 32% from $100.8 million in the fourth quarter of 2007. Gross margins (adjusted) were 92% in the fourth quarter of 2008, versus 88% in the fourth quarter of 2007. Gross profits (IFRS) for the fourth quarter of 2008 were $128.7 million, up 35% from $95.3 million in the fourth quarter of 2007. Gross margins (IFRS) for the fourth quarter of 2008 were 89%, compared to 83% in the fourth quarter of 2007. Gross profits (adjusted) for the twelve months ended December 31, 2008, were $458.2 million, up 51% from $304.3 million for the twelve months ended December 31, 2007. Gross margins (adjusted) were 91% in the twelve months ended December 31, 2008, versus 89% for the twelve months ended December 31, 2007. Gross profits (IFRS) for the twelve months ended December 31, 2008 were $438.7 million, up 51% from $291.3 million for the twelve months ended December 31, 2007. Gross margins (IFRS) for the twelve months ended December 31, 2008 were 87%, compared to 85% for the twelve months ended December 31, 2007. Gross margins increased in 2008 as compared to 2007, as planned following the acquisition of ZANTAZ in July 2007 and the completion of integration and transition of the core ZANTAZ business to higher margin sales.

Net profit (adjusted) for the fourth quarter of 2008 was $53.5 million, or $0.25 per diluted share, compared to net profit (adjusted) of $28.5 million, or $0.13 per diluted share, for the fourth quarter of 2007. Net profit (IFRS) for the fourth quarter of 2008 was $51.4 million, or $0.24 per diluted share, compared to net profit (IFRS) of $22.7 million, or $0.11 per diluted share, for the fourth quarter of 2007.

Under IAS 38 the company is required to capitalize certain aspects of its research and development activities. The amount of R&D that was capitalized in fourth quarter of 2008 was $2.4 million. Q4 2008 R&D capitalization is offset by amortisation charges of $1.5 million arising from historical R&D capitalization. This results in a net credit (before tax) in the quarter of $0.9 million, and a net margin impact of less than 1%.

Net profit (adjusted) for the twelve months ended December 31, 2008 was $148.0 million, or $0.68 per diluted share, compared to net profit (adjusted) of $77.2 million, or $0.38 per diluted share, for the twelve months ended December 31, 2007. Net profit (IFRS) for the twelve months ended December 31, 2008 was $131.7 million, or $0.61 per diluted share, compared to net profit (IFRS) of $62.5 million, or $0.30 per diluted share, for the twelve months ended December 31, 2007.

Cash balances were $199.2 million at December 31, 2008, an increase of $106.6 million from $92.6 million at December 31, 2007, despite adverse foreign exchange movements of some $13.8 million. Movements in cash flow during the twelve months reflect a combination of excellent cash generation from operating activities and proceeds from exercise of share options, offset by quarterly repayments of Autonomy's bank loan, capital expenditure and installment tax payments. Autonomy has no net debt.

Trade receivables at December 31, 2008 were $141.3 million, compared to $110.5 million at December 31, 2007. Accounts receivable days sales outstanding were 84 days at December 31, 2008, compared to 83 days at December 31, 2007. Deferred revenues were $99.2 million at December 31, 2008 compared with $97.9 million at December 31, 2007.

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 fundamental business without giving effect to certain specific, non-recurring and non-cash charges. Consequently, the non-IFRS (adjusted) results exclude share of loss of associates, post-acquisition restructuring costs and non-cash charges for the amortization of purchased intangibles, share-based compensation, foreign exchange gains and losses, impairment of investments and associated tax effects. Management uses the adjusted results to assess the financial performance of Autonomy's operational business activities.

Q4 Product Sales

Autonomy's infrastructure technology has been adopted by enterprises to process information across all internal and external data formats and sources. During the fourth quarter of 2008, major customer wins included: JP Morgan; Citi; BBC; BAE Systems; Statoil; Société Générale; Symantec; Avaya; CNN; State of Texas; American Automobile Association; Lloyds TSB; McAfee; Bank of Thailand; Deutsche Bank; European Patent Office; Xerox; AT&T; and Clifford Chance. Q4 2008 business also included new and repeat licenses with multiple government, defence and intelligence agencies around the globe such as the U.S. Army and the U.S. DEA, as well as in the U.K., Italy, Singapore, Canada, Hungary, the European Commission, Slovakia and Mexico. Repeat business from existing customers accounted for approximately 50% of revenue for the quarter.

Strategic Partnerships and OEMs

Autonomy's OEM Program continued to grow during Q4 2008. Agreements were signed with 12 customers during the quarter, including Symantec, Dassault and Tridion.

Q4 2008 Corporate Developments

During the fourth quarter of 2008 Autonomy continued to extend its market leadership with the introduction of key new and upgraded technologies, including:

During the fourth quarter Autonomy was recognized in multiple ways for its market leadership and unmatched technology. Recognition during the quarter included:

About Autonomy Corporation plc

Autonomy Corporation plc (LSE: AU. or AU.L) is a global leader in infrastructure software for the enterprise and is spearheading the meaning-based computing movement. Autonomy's technology allows computers to harness the full richness of human information, forming a conceptual and contextual understanding of any piece of electronic data including unstructured information, be it text, email, voice or video. Autonomy's software powers the full spectrum of mission-critical enterprise applications including information access technology, pan-enterprise search, information governance, end-to-end eDiscovery and archiving, records management, business process management, customer interaction solutions, and video and audio analysis, and is recognized by industry analysts as the clear leader in enterprise search.

Autonomy's customer base comprises of more than 17,000 global companies and organizations including: 3, ABN AMRO, AOL, BAE Systems, BBC, Bloomberg, Boeing, Citigroup, Coca Cola, Daimler Chrysler, Deutsche Bank, Ericsson, Ford, GlaxoSmithKline, Lloyd TSB, NASA, Nestle, the New York Stock Exchange, Reuters, Shell, T-Mobile, the U.S. Department of Energy, the U.S. Department of Homeland Security and the U.S. Securities and Exchange Commission. More than 350 companies OEM Autonomy technology, including BEA, Citrix, EDS, H-P, Novell, Oracle, Sybase and TIBCO, and the company has over 400 VARs and Systems Integrators. The company has offices worldwide.

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

Download the full PDF version of the Q4 2008 Report (PDF)