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Autonomy Corporation plc (LSE: AU.) 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.

The Autonomy Group includes: Autonomy ZANTAZ, the leader in the archiving, e-Discovery and Proactive Information Risk Management (IRM) markets; Autonomy Cardiff, a leading provider of Intelligent Document solutions; Autonomy etalk, award-winning provider of enterprise-class contact center products, Autonomy Virage, a visionary in rich media management and security and surveillance technology and Autonomy Meridio, a leading provider of records management software.

Autonomy's customer base includes more than 17,000 global companies and organizations, including BAE Systems, Ford, Ericsson, Royal Sun Alliance, Sun Microsystems and public sector agencies including the U.S. Department of Defense, NASA and the U.S. Department of Energy. Strategic reseller and OEM partners include leading companies such as ATG, BEA, Business Objects, Brio, Citrix, Computer Associates, EDS, IBM Global Services, iManage, Novell, Novient, Vignette and Sybase. The company has offices worldwide.

Shareholder Information

Why is Autonomy Different?

Autonomy has a number of unusual distinguishing features that, combined together, have created a potent business mix and have produced a truly unique company and technology. This unique combination has delivered unsurpassed, cost effective, high performance, operationally proven solutions and an enviable client list.

Autonomy's Pedigree

The advanced pattern recognition technology that fuels Autonomy's software, originally developed by Neurodynamics, is based on world-leading probabilistic modelling and digital signal processing technologies developed from research at Cambridge University.

Autonomy's Sales & Distribution Strategy

In distinct contrast to other software companies who derive 40-50% of their revenues from services, Autonomy 's strong focus on the indirect channel as a revenue stream enables it to pass virtually all low-margin services to Integrators, Value Added Resellers (VARs), Application Service Providers (ASPs) and distribution partners. The alternative - chosen by many software and technology companies - is to fulfil low margin opportunities and pursue a "solutions selling model". In the short term such a model sometimes creates fast revenue growth but always demands the immediate deployment of additional resources, normally in the form of headcount. As a result, in the medium term this proves not to be a scalable business - due to the need to continually grow headcount in relation to revenues - and in the long-term results in lower operating margins and profitability.

In addition, Autonomy's go-to-market strategy places strong emphasis on leveraging channel partners, thus functioning as a significant and sustainable revenue stream without the headcount growth otherwise needed. This is particularly the case with Original Equipment Manufacturer (OEM) partners, which ties Autonomy's revenue growth to large and rapidly growing enterprise, web or new media software markets but does not require material input after integration.

Autonomy's Profits & Gross Margins

Ultimately, profit is the "proof of the pudding" of any business success story. Autonomy reports under US GAAP which means we can be directly compared with US technology companies. Such comparison shows that Autonomy's gross margins remain high and reflect the fact that we are all about selling software, not generating revenues from services such as implementation and customization for particular customers. Companies with 60-70% gross margins will typically be in this situation due to the services they sell as part of a software sale, or because they resell someone else's product. Autonomy does neither.

On top of Autonomy's product business, revenue is generated through IP licensing to other software vendors (OEM's). Ongoing royalties are generated to Autonomy by OEM's selling their product containing Autonomy technology - these revenues are 100% gross margin revenues, and extremely scalable since no ongoing effort is required from Autonomy to grow sales by OEM partners.

Autonomy's headcount growth in relation to its revenue growth is decoupled. There is virtually no correlation between revenues and the number of employees and, as a result, revenues have historically grown exponentially while headcount has grown sub-linearly.

The effect of OEM's 100% gross margin royalties multiplies the effect of this important differentiator even separating, perhaps uniquely, any linkage to sales headcount.

Autonomy's Technology

Autonomy's technology enables computers to form an understanding of a page of text, web pages, e-mails, voice, documents and people and is therefore able to power any application dependant upon unstructured information within every market sector, including: e-commerce, customer relationship management, knowledge management, enterprise information portals and online publishing applications. This is evidenced by the significant penetration of the technology in a diversity of vertical markets and has been achieved because every market sector needs to manage and leverage the benefits of unstructured information.

Autonomy employs a fundamentally different and unique combination of pattern matching, signal processing and Bayesian inference technologies. This unique combination also provides a unique combination of advantages:

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