News RESULTS DATE CHANGE | AUTONOMY CORPORATION…
AUTONOMY CORPORATION PLC ANNOUNCES RESULTS FOR THE FIRST QUARTER ENDED MARCH 31, 2010
Record Q1 results with strong EPS growth in line with analysts’ consensus estimates; EPS (adj.) up 44%; Revenues up 50%; Profit from operations (adj.) up 48%
Cambridge, England – April 21, 2010 – Autonomy Corporation plc (LSE: AU. or AU.L), a global leader in infrastructure software, today reported financial results for the first quarter ended March 31, 2010.
Financial HighlightsRecord first quarter revenues of $194.2 million (versus analysts’ consensus of $193 million), up 50% from Q1 2009 including strong organic growth of 17%1Gross profits (adj.) at $172.6 million, up 48% from Q1 2009; gross margins (adj.) at 89%Q1 operating margins (adj.) at 44%Record Q1 profit before tax (adj.) at $85.3 million, up 47% from Q1 2009Record Q1 fully diluted EPS (adj.) of $0.25 (versus analysts’ consensus of $0.25), up 44% from Q1 2009. Fully diluted EPS (IFRS) of $0.21 compared to $0.15 in Q1 2009
1 See supplemental metrics on page 3.
Commenting on the results, Dr Mike Lynch, Group CEO of Autonomy said today: “We entered 2010 with strong momentum after significant market share gains in 2009, aided by strong product positioning and increased marketing expenditure at a time when other companies were scaling back. This strength is now reinforced with discretionary spend being made available as companies look to invest for growth. Whilst Q1’10 reflected the expected seasonality as one of our traditionally weaker quarters, the stronger pipeline and improved closure rates mean that we are growing more confident about a possible recovery. Customers have resumed planning for larger projects, the main effects of which we expect to see in the second half.”
Dr Lynch continued: “Also during the quarter, Chairman Robert Webb QC fulfilled his commitment to appoint two new non-executive directors to Autonomy’s Board. We are privileged to be joined by Jonathan Bloomer and Dr Frank Kelly, each of whom brings a wealth of experience.”
Dr Lynch concluded: “Understanding of the applicability of IDOL SPE continues to increase and interest in this nascent market together with new product launches in the meaning based marketing and protect areas strengthen our overall offering. We continue to make our technology available across a host of platforms from OEM and software license to appliance and cloud. These are likely to be strong growth drivers in 2010 and underpin our positive outlook, but we also remain mindful of the fragility of the global macro-economic environment. We have been able to raise sufficient capital at an attractive rate to facilitate the next phase of our strategy and so look forward to the rest of the year.”
First quarter 2010 HighlightsBlue chip first quarter wins include: AT&T, Genentech, Lloyds Bank, American Automobile Association, Carnival Cruises, Citi, Kraft, O2, Samsung, Tesco, Visa, Bank of America and Bayer, as well as new and repeat licenses with multiple government, defence and intelligence agencies around the globe, including in the United States, the United Kingdom, the European Commission, Canada, Spain and Abu Dhabi11 OEM deals signed including new deals and extensions with Adobe, McAfee and SiemensRepeat business accounted for 51% of revenue in Q1Strong organic growth of 17% from Q1 2009Record Q1 revenue of $194.2 million, up 50% from Q1 2009Gross margins (adj.) in targeted range at 89%Record Q1 profit before tax (adj.) of $85.3 million, up 47% from Q1 2009 (IFRS: $68.8 million, up 38%)Operating margins (adj.) stable at 44% (Q1 2009: 45%)Fully diluted EPS (adj.) of $0.25, up 44% from Q1 2009 (IFRS: $0.21, up 41%)Positive cash flow generated by operations of $85.5 million (Q1 2009: $51.1 million), up 67%Average selling price for meaning-based technologies continues to increase.Deferred revenue increased to $172.2 million (Q1 2009: $163.7 million)DSOs increased slightly to 93 days (Q1 and Q4 2009: 88 days) due to an outstanding government related debtor and the timing of significant commercial customer payments received just after quarter end. This is expected to return to the normal range of 85-90 days during Q2 2010.
Revenues for the first quarter of 2010 totalled $194.2 million, up 50% from $129.8 million for the first quarter of 2009 due to strong organic growth and full quarter Interwoven contribution. During the first quarter of 2010 there were 19 deals over $1.0 million. In the first quarter of 2010, Americas revenues of $135.6 million represented 70% of total revenues, and Rest of World revenues of $58.6 million represented 30% of total revenues.
Gross Profits and Gross Margins
Gross profits (adj.) for the first quarter of 2010 were $172.6 million, up 48% from $117.0 million for the first quarter of 2009. Gross margins (adj.) for the first quarter of 2010 were 89%, compared to 90% for the first quarter of 2009. Gross profits (IFRS) for the first quarter of 2010 were $158.1 million, up 42% from $111.6 million for the first quarter of 2009. Gross margins (IFRS) for the first quarter of 2010 were 81%, compared to 86% for the first quarter of 2009.
Profit from Operations and Operating Margins
Profit from operations (adj.) for the first quarter of 2010 was $86.2 million, up 48% from $58.1 million for the first quarter of 2009. Operating margins (adj.) were 44% in the first quarter of 2010, consistent with 45% in the first quarter of 2009. Profit from operations (IFRS) for the first quarter of 2010 was $73.1 million, up 45% from $50.3 million for the first quarter of 2009. Operating margins (IFRS) were 38% in the first quarter of 2010 compared to 39% in the first quarter of 2009.
The effective tax rate in the first quarter of 2010 was 28%, in line with the forecast 2010 full year effective tax rate (2009: 28%) and down from 31% in the first quarter of 2009. Pending the completion of a s382 tax study, which considers the potential availability of further US tax losses, the full year tax rate may decrease from the current forecast level of 28% should further acquired losses become available.
Foreign Exchange Impact
The effect on revenue in the first quarter of 2010 of movements in foreign exchange rates was a decrease of approximately $0.9 million compared to the fourth quarter of 2009. In the first quarter of 2010 the U.S. Dollar strengthened slightly versus Sterling to an average of $1.56 versus $1.63 in the fourth quarter of 2009 (Q1 2009: $1.44).
Net profit (adj.) for the first quarter of 2010 was $61.7 million, or $0.25 per diluted share, compared to net profit (adj.) of $40.2 million, or $0.17 per diluted share, for the first quarter of 2009. Net profit (IFRS) for the first quarter of 2010 was $49.7 million, or $0.21 per diluted share, compared to net profit (IFRS) of $34.5 million, or $0.15 per diluted share, for the first quarter of 2009.
IAS 38 Charges and Capitalization
Under IAS 38 the company is required to capitalize certain aspects of its research and development activities. R&D capitalization in the first quarter of 2010 was $6.6 million (Q1 2009: $3.3 million; Q4 2009: $5.6 million), reflecting a full quarter of Interwoven contribution. Q1 2010 R&D capitalization is offset by amortization charges of $3.5 million (Q1 2009: $1.8 million; Q4 2009: $3.2 million) arising from historical R&D capitalization. The capitalization and offsetting charges resulted in a net credit (before tax) in the quarter of $3.1 million (Q1 2009: $1.5 million; Q4 2009: $2.4 million), and a net margin impact of 1.6% (Q1 2009: 1.2%; Q4 2009: 1.1%).
Balance Sheet and Cash Flow
Cash balances were $910.9 million at March 31, 2010, an increase of $668.1 million from $242.8 million at December 31, 2009. Movements in cash flow during the first quarter of 2010 of note included:Repayment of the Interwoven credit facility of $54 million;Acquisition of MicroLink LLC;Net proceeds of Autonomy’s convertible bond offering; andPurchasing of inventory of $10 million for Q2 2010 sales, most of which have now completed.
Adjusting for purchase of inventory and monies received immediately after quarter end, primarily from government debtors, cash conversion was over 100%. Trade receivables at March 31, 2010, were $211.4 million, compared to $230.2 million at December 31, 2009. Accounts receivable days sales outstanding were 93 days at March 31, 2010, compared to 88 days at March 31, 2009 and at December 31, 2009. Deferred revenues were $172.2 million at March 31, 2010, compared with $173.5 million at December 31, 2009 showing normal seasonality. Despite the difficult economic climate, bad debt write off in the quarter was less than 1% of revenues.
Accrued income at March 31, 2010 was not material, at under 5% of revenues.
Autonomy is supplying supplemental metrics to assist in the understanding and analysis of Autonomy’s business.
Three Months Ended March 31, 2010 Organic Growth* 17%1 Cash conversion (LTM CFFO/LTM adj EBITDA**) 81% Cash conversion (lagged to account for growth and seasonality of the business) 89% Cash conversion as a percentage of the theoretical maximum (87%) 93% Product including hosted and OEM* $121m IDOL Product $47m IDOL Cloud $45m Service revenues* $11m Deferred revenue release (primarily maintenance)* $62m OEM derived revenues* $29m OEM Dev $3m OEM Ongoing $26m Deals over $1 million 19 Tax rate 28% Available tax losses* $187m LTM revenue with terms >365 days in normal range ( Accrued income in normal range (
* The above items are provided for background information and may include qualitative estimates.
** Adj. EBITDA is defined as operating cash flow before movements in working capital.
1 The company integrates acquired businesses immediately upon acquisition such that it is not possible to identify results from acquired businesses separately from the results of the group. In order to estimate organic growth the company has combined the reported results for Autonomy and Interwoven for Q1 2009 leading to a pro forma adjustment of $36 million from Interwoven revenues from January 1, 2009 up to March 17, 2009.
Q1 2010 Product Sales
During the first quarter of 2010, major customer wins included: AT&T, Genentech, Lloyds Bank, American Automobile Association, Carnival Cruises, Citi, Kraft, O2, Samsung, Tesco, Visa, Bank of America and Bayer. Repeat business from existing customers accounted for approximately 51% of revenue for the quarter. Q1 2010 business also included new and repeat licenses with multiple government, defence and intelligence agencies around the globe, including in the United States, the United Kingdom, the European Commission, Canada, Spain and Abu Dhabi.
Strategic Partnerships and OEMs
Autonomy’s OEM Program continued to grow strongly during Q1 2010. Agreements were signed with 11 customers during the quarter, including new and extended agreements with Adobe, McAfee and Siemens.
Q1 2010 Corporate Developments
During the first quarter of 2010 Autonomy continued to extend its market leadership with the introduction of key new and upgraded IDOL technologies, including the launches of:World’s first Meaning Based multichannel customer interaction analytics application;New innovations across Autonomy’s Meaning Based Marketing (MBM) platform;Unique integrated web content management, search, optimization and rich media on a single platform;DSMail self-service archiving solution for email management, governance and eDiscovery; andIndustry-leading eDiscovery technology now available on an easy to use appliance.
During the first quarter Autonomy was recognised in multiple ways for its market leadership and unmatched technology, including being:Rated “Strong Positive” in Gartner’s eDiscovery market report; andReceiving top honours at the sixth annual law technology news awards for Autonomy’s end-to-end eDiscovery platform.
Scheduling of Conference Call and Further Information
Autonomy’s results conference call will be available live at www.autonomy.com on April 21, 2010, at 9:30 a.m. BST/4:30 a.m. EST/1:30 a.m. PST.
From time to time the company answers investors’ questions on its website which may include information supplemental to that set forth above. Questions and answers can be found at: www.autonomy.com/investors/questions.
About Autonomy Corporation plc
Autonomy Corporation plc (LSE: AU. or AU.L), a global leader in infrastructure software for the enterprise, spearheads the Meaning Based Computing movement. IDC recently recognized Autonomy as having the largest market share and fastest growth in the worldwide search and discovery market. 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, such as text, email, web pages, voice, or video. Autonomy’s software powers the full spectrum of mission-critical enterprise applications including pan-enterprise search, customer interaction solutions, information governance, end-to-end eDiscovery, records management, archiving, business process management, web content management, web optimization, rich media management and video and audio analysis.
Autonomy’s customer base is comprised of more than 20,000 global companies, law firms and federal agencies including: AOL, BAE Systems, BBC, Bloomberg, Boeing, Citigroup, Coca Cola, Daimler AG, Deutsche Bank, DLA Piper, Ericsson, FedEx, Ford, GlaxoSmithKline, Lloyds Bank, NASA, Nestlé, the New York Stock Exchange, Reuters, Shell, Tesco, 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 400 companies OEM Autonomy technology, including Symantec, Citrix, HP, Novell, Oracle, Sybase and TIBCO. The company has offices worldwide. Please visit www.autonomy.com to find out more.
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 / Haya Herbert-Burns
+44 (0)20 7831 3113
Marc Geall, Head of IR and Corporate Strategy
Autonomy Corporation plc
+44 (0)1223 448 000
Download the full PDF version of the Q1 2010 Report (PDF)
Download the Presentation Slides (PDF)