Autonomy Corporation Plc Announces Results for the Second Quarter and Six Months Ended June 30, 2008
Source PRNOTW
CAMBRIDGE, England, July 21 /PRNewswire-FirstCall/ -- Autonomy Corporation plc (LSE: AU. or AU.L), a global leader in infrastructure software, today reported financial results for the second quarter and six months ended June 30, 2008. Financial Highlights Three Months Six Months Ended Ended (unaudited) (unaudited) June June June June 30, 30, 30, 30, 2008 2007 2008 2007 Results in US$ ($'000s except per share) $'000 $'000 $'000 $'000 Revenues.................................125,649 73,255 230,737 138,730 Gross profit (adjusted)*................ 114,287 67,014 207,751 127,024 Gross profit margin (adjusted)*......... 91% 91% 90% 92% Profit from operations (adjusted)*....... 50,382 25,371 81,451 43,910 Profit before tax (adjusted)*............ 50,778 27,453 81,914 46,971 Net profit (adjusted)*................... 35,372 18,775 57,056 32,115 Gross profit (IFRS)................... 109,170 65,178 197,354 123,288 Gross profit margin (IFRS)....... 87% 89% 86% 89% Profit from operations (IFRS)....... 43,867 22,553 68,103 38,003 Profit before tax (IFRS)............ 43,742 24,179 67,355 40,259 Net profit (IFRS)........................ 30,471 16,535 46,916 27,525 EPS - basic (adjusted)*...................... $0.17 $0.10 $0.27 $0.17 - diluted (adjusted)*.................... $0.16 $0.10 $0.26 $0.17 - basic (IFRS)........................ $0.14 $0.09 $0.22 $0.14 - diluted (IFRS)........................ $0.14 $0.08 $0.22 $0.14
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* 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 and non-cash translational foreign exchange gains and losses and associated tax effects. See reconciliations on page 6.
QUARTERLY REPORT AND INTERIM MANAGEMENT STATEMENT Second Quarter 2008 Highlights - Record quarterly revenue, up 72% from Q2 2007 driven by strong organic growth and contribution from acquisitions - Strong organic IDOL growth of 28% - Licence revenue up 40% from organic growth - Operational gearing sees operating margins (adj.) at record 40%, up from 35% in Q2 2007 - Record profit before tax (IFRS), up 81% from Q2 2007 - 21st consecutive quarter of year-on-year growth - Gross margins (adjusted) at 91% - Average selling price for meaning-based technologies at $397,000 (Q2 2007: $385,000) - Blue chip second quarter wins include KPMG, Societe Generale, Shanghai Patent Office, Huron, St Jude, Nationwide Insurance, eBay, Fox Media Group, Ernst & Young, McKinsey, Qualcomm, Ford, Toyota, GE Healthcare, Wells Fargo, the British Museum and TNT, as well as significant deals with multiple government, defence and intelligence agencies around the globe including in the U.S., U.K., Greece, the Netherlands, Singapore, Australia, NATO and Brazil - Eleven OEM deals signed including new deals and extensions with Nortel, Talisma, Verdasys and Yahoo! - Positive cash flow generated from operations of $36.1 million (2007: $19.0 million) - 34th consecutive quarter of profitability Six Month 2008 Highlights - Record six months revenues, up 66% from 2007 driven by strong organic growth and contribution from acquisitions - Largest deals in company's history - Record profit from operations (adjusted) up 85% from 2007 - Record profit before tax (IFRS), up 67% from 2007 - Gross margins (adjusted) at 90% - Positive cash flow generated from operations of $61.2 million (2007: $39.0 million), up 57%Commenting on the results, Dr. Mike Lynch , Group CEO of Autonomy said today: "We are pleased to announce our record breaking second quarter and six month 2008 results which are, as previously stated, significantly ahead of consensus estimates. Our performance during this period has been driven by strong organic growth across all areas of our business, and have been achieved without recognizing significant revenues from our recently announced large banking deals. Once again we have shown the operational gearing in our business model with operating margins hitting a new record of 40%."
Dr. Lynch concluded: "Despite our conservative approach due to the current macro uncertainty, the fact that our fundamental market dynamics and our pipeline going into the second half remain strong leads us to be comfortable with a positive upgrade with respect to the outlook for the second half of the year. We will review the situation again at the end of Q3."
Second Quarter and Six Month Financial Highlights
Revenues for the second quarter of 2008 totalled
Gross profits (adjusted) for the second quarter of 2008 were
Net profit (adjusted) for the second quarter of 2008 was
Net profit (adjusted) for the six months ended June 30, 2008 was
Cash balances were
Receivables for the second quarter of 2008 were
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 and associated tax effects. Management uses the adjusted results to assess the financial performance of Autonomy's operational business activities.
Q2 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 second quarter of 2008, major customer wins included: KPMG, Societe Generale, Shanghai Patent Office, Huron, St Jude, Nationwide Insurance, eBay, Fox Media Group, Ernst & Young, McKinsey, Qualcomm, Ford, Toyota, GE Healthcare, Wells Fargo, the British Museum and TNT. Q2 2008 business also included new and repeat licenses with multiple government, defence and intelligence agencies around the globe including in the U.S., the U.K., the Netherlands , Singapore , Australia , NATO and Brazil . 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 Q2 2008. Agreements were signed with eleven customers during the quarter, including new and extended agreements with Nortel, Talisma, Verdasys and Yahoo!. Autonomy was selected as its preferred global partner for enterprise search and high end information processing by Logica during Q2 2008.
Q2 Corporate Developments
During the second quarter of 2008 Autonomy continued to extend its market leadership with the introduction of key new and upgraded technologies, including:
- The industry's first information governance platform that automates real-time policy management based on forming a conceptual and contextual understanding of all enterprise information; - The industry's first pan-enterprise search platform for legal eDiscovery and information access, enabling search across all sources of electronically stored information, finding relevant information for litigation with auditable and repeatable results, and applying a litigation hold function to preserve data from normally scheduled or ad hoc deletion. - Introduction of the industry's most scalable end-to-end hosted eDiscovery solution, with 6,000 servers across five data centers providing hosted eDiscovery solutions for the largest and most complex legal and regulatory matters; - New and enhanced features for Autonomy Virage's Command and Control, a complete infrastructure platform for security and surveillance operations; and - Autonomy etalk's Qfiniti interaction recording being certified compliant with key contact center solutions from Avaya. During the second quarter Autonomy was recognized in multiple ways for its market leadership and unmatched technology, including: - Being named the leader in the May 2008 Forrester Wave(TM): Enterprise Search, Q2 2008 report, receiving the highest score in all three categories, which include current offering, strategy and market presence, as well as the highest scores for its administration and security capabilities, product strategy and financial resources to support strategy; - Being named the leader in the enterprise information access market by industry analyst Ovum, ranked by its market position and breadth of functional scope and appropriateness for the enterprise; - Autonomy etalk's Intelligent Contact Center solution was named recipient of the 2008 CRM Excellence Award by Technology Marketing Corporation (TMC)'s Customer Interaction Solutions(R) magazine; - Autonomy's Cardiff division was named a "Cool Vendor" in the recent Gartner report titled "Cools Vendors in Business Process Management, 2008"; and - Autonomy's Cardiff division attained Gold Certified Partner status in the Microsoft Partner Program with a competency in Business Process and Integration.Six Month Important Events
During the first half of 2008 the key events in the company's development have been the implementation of the company's business plan and successful integration of acquisitions completed during 2007. As expected, market drivers of regulatory changes such as the U.S. Federal Rules of Civil Procedure have resulted in a convergence of legal and operational information systems, leading to some of the largest deals in the company's history, and driving growth in the company's OEM business.
Risk Factors
As with all businesses, the Group is affected by certain risks, not wholly within our control, which could have a material impact on the Group's long term performance and could cause actual results to differ materially from forecast and historic results.
The principal risks and uncertainties facing the Group have not changed from those set out in the Annual Report and Accounts 2007. These include: dependence on our core technology; competition; levels of operational spending versus revenues; market conditions; average selling price; economic and market conditions; reliance on value added resellers; continued service of our executive directors; hiring and retention of qualified personnel; product errors or defects; problems encountered in connection with potential acquisitions; and intellectual property claims.
In addition to the foregoing, the primary risk and uncertainty related to the Group's performance for the remainder of the year is the challenging macro economic environment, which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. This effect has been offset during the first six months of the year to some extent by the legal, regulatory and compliance issues which have arisen for enterprises in connection with the current economic environment.
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 forms 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, BI, CRM, KM, call center solutions, rich media management, information risk management solutions and security applications, 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, Lloyds 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. Autonomy also has over 350 OEM partners and more than 400 VARs and Integrators, numbering among them leading companies such as BEA, Citrix, EDS, IBM Global Services, Dassault Systemes, Satyam, Sybase, Symantec, TIBCO, Vignette and Wipro. The company has offices worldwide.
The Autonomy Group includes: ZANTAZ, the leader in the archiving, e-Discovery and Proactive Information Risk Management (IRM) markets; Cardiff, a leading provider of Intelligent Document solutions; etalk, award-winning provider of enterprise-class contact center products, Virage, a visionary in rich media management and security and surveillance technology and Meridio, a leading provider of records management software.
Autonomy and the Autonomy logo are registered trademarks or trademarks of Autonomy Corporation plc. All other trademarks are the property of their respective owners.
AUTONOMY CORPORATION plc CONSOLIDATED INCOME STATEMENT (in thousands, except per share amounts) Three Months Six Months Ended Ended (unaudited) (unaudited) June 30, June 30, June 30, June 30, 2008 2007 2008 2007 Continuing operations $'000 $'000 $'000 $'000 Revenues (see note 3).................................. 125,649 73,255 230,737 138,730 Cost of revenues (excl. amortisation)(11,362) (6,241) (22,986) (11,706) Amortization of purchased intangibles (5,117) (1,836) (10,397) (3,736) Total cost of revenues (16,479) (8,077) (33,383) (15,442) Gross 109,170 65,178 197,354 123,288 profit.............................. Operating expenses: Research and development............ (19,778) (13,067) (39,566) (26,673) Sales and (34,507) (23,198) marketing........................... (67,550) (45,760) General and administrative.......... (11,003) (6,234) (22,148) (12,314) Other costs................................................................... Post-acquisition restructuring costs (601) - (901) - Gain (loss) on foreign exchange...... 586 (126) 914 (538) Total operating expenses..... (65,303) (42,625) (129,251) (85,285) Profit from operations.................. . 43,867 22,553 68,103 38,003 Share of loss of associate.................... (521) (456) (1,211) (805) Interest receivable.................... ..... 772 2,544 1,495 4,047 Interest payable............................. (376) (462) (1,032) (986) Profit before income taxes..... ... 43,742 24,179 67,355 40,259 Income taxes (see note 4) (13,271) (7,644) (20,439) (12,734) Net profit........................... .. 30,471 16,535 46,916 27,525 Basic earnings per share (see note 6) $0.14 $0.09 $0.22 $0.14 Diluted earnings per share (see note 6) $0.14 $0.08 $0.22 $0.14 Reconciliation of Adjusted Financial Measures Three Months Six Months Ended Ended (unaudited) (unaudited) June 30, June June 30, June 30, 2008 30, 2008 2007 2007 $'000 $'000 $'000 $'000 Gross profit 109,170 65,178 197,354 123,288 Amortization of purchased intangibles. 5,117 1,836 10,397 3,736 Gross profit (adjusted)........................... 114,287 67,014 207,751 127,024 Profit before income taxes................................ 43,742 24,179 67,355 40,259 Post-acquisition restructuring costs. 601 - 901 - (Gain) loss on foreign exchange...... (586) 126 (914) 538 Amortization of purchased intangibles 5,117 1,836 10,397 3,736 Share of loss of associate................................ 521 456 1,211 805 Share-based compensation (see note 5)... 1,383 856 2,964 1,633 Profit before tax (adjusted)..............................50,778 27,453 81,914 46,971 Provision for income taxes................................ (15,406) (8,678) (24,858) (14,856) Net profit (adjusted)............................ 35,372 18,775 57,056 32,115 Profit from operations............................ 43,867 22,553 68,103 38,003 Post-acquisition restructuring costs.. 601 - 901 - Amortization of purchased intangibles. 5,117 1,836 10,397 3,736 Share-based compensation (see note 5). 1,383 856 2,964 1,633 (Gain) loss on foreign exchange....... (586) 126 (914) 538 Profit from operations (adjusted)..... 50,382 25,371 81,451 43,910 AUTONOMY CORPORATION plc CONSOLIDATED BALANCE SHEET (in thousands, except share data) As at (unaudited) June 30, Dec 31, 2008 2007 $'000 $'000 ASSETS Non-current assets: Goodwill................................ 821,974 820,147 Other intangible assets.................................. 107,547 113,956 Property and equipment, net.................................... 30,597 28,788 Equity and other investments............................ ....................................... 13,700 20,010 Deferred tax asset.................................. 13,159 8,862 Total non-current assets................................. 986,977 991,763 Current assets: Trade receivables, net........................... ........ 126,598 110,468 Other receivables............................ 38,150 21,019 Total trade and other receivables............................ 164,748 131,487 Inventory.............................. 963 583 Cash and cash equivalents............................ 121,401 92,571 Total current assets................................. 287,112 224,641 TOTAL ASSETS................................ 1,274,089 1,216,404 CURRENT LIABILITIES Trade payable................................ (13,664) (11,595) Other payables............................... (20,465) (29,374) Total trade and other payables............................... (34,129) (40,969) Bank loan................................... (10,637) (10,638) Tax liabilities............................ (20,211) (20,118) Deferred revenue................................ (98,450) (77,491) Provisions............................. (857) (1,099) Total current liabilities............................ (164,284) (150,315) Net current assets................................. 122,828 74,326 NON-CURRENT LIABILITIES Bank loan................................. (31,913) (37,231) Deferred revenue................................ (6,348) (20,389) Other payables............................... (11,078) (9,899) Provisions............................. - (257) Total non-current liabilities............................ (49,339) (67,776) Total liabilities............................ (213,623) (218,091) NET ASSETS................................. 1,060,466 998,313 Shareholders' equity: Ordinary shares (1).................................... 1,204 1,196 Share premium account................................ 789,321 780,888 Capital redemption reserve................................ 135 135 Own shares................................. (924) (981) Merger reserve................................ 27,589 27,589 Stock compensation reserve................................. 12,345 9,438 Revaluation reserve................................. 3,701 10,163 Translation reserve................................. 25,425 23,801 Retained earnings................................ 201,670 146,084 TOTAL EQUITY................................. 1,060,466 998,313 (1) At June 30, 2008 , 600,000,000 ordinary shares of nominal value
AUTONOMY CORPORATION plc
NOTES TO THE CONDENSED SET OF CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2008 - UNAUDITED
1. General information
The information for the year ended December 31, 2007 does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985.
The results of operations for the three and six months ended June 30, 2008 , are not necessarily indicative of the operating results for future operating periods. The condensed financial statements should be read in connection with the company's audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2007 .
2. Accounting policies
The annual financial statements of Autonomy Corporation plc are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this quarterly report has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union. The same accounting policies, presentation methods of computation are followed in the condensed set of financial statements as applied in the Group's latest annual audited financial statements.
3. Segmental information
Whilst the group currently operates under a number of different divisions, the group's core technology, types of revenue and associated costs and returns are comparable. Each of these divisions is founded on the group's unique Intelligent Data Operating Layer, the group's core infrastructure for automating the handling of all forms of unstructured information. As a result, the group maintains only one reportable business segment. The group's operations are located primarily in the United Kingdom , the US and Canada . The company also has a significant presence in a number of other European countries as well as China , Japan , Singapore and Australia .
The following table provides an analysis of the group's sales by geographical market based upon the location of the Group's customers for all periods. Three Months Six Months Ended Ended (unaudited) (unaudited) June June 30, June June 30, 30, 2007 30, 2007 2008 2008 Revenue by region: $'000 $'000 $'000 (restated) $'000 (restated) Americas............... 81,517 45,616 145,419 84,171 Rest of World.................. 44,132 27,639 85,318 54,559 Total................. 125,649 73,255 230,737 138,730 The quarterly report in Q2 2007 presented the above on the basis of the
location of the Group's assets. As noted in the 2007 annual report, the
directors have changed the presentation as they believe the revised
presentation to be more appropriate under IAS 14. The financial impact of
this restatement has been to reallocate approximately
Earnings per share (adjusted) is calculated by dividing the net profit (adjusted) amounts shown on page 6 by the share denominators shown above.
7. Related Party Transactions
There have been no related party transactions or changes in related party transactions described in the latest annual report that could have a material effect on the financial position or performance of the Group in the first six months of the financial year.
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Statement of Directors' Responsibility
We confirm that to the best of our knowledge:
(a) the condensed set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting";
(b) the interim management report includes a fair review of the information required by DTR 4.2.7 (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
(c) the interim management report includes a fair review of the information required by DTR 4.2.8 (disclosure of related parties' transactions and changes therein).
By order of the Board Dr Michael R Lynch Sushovan T Hussain Chief Executive Officer Chief Financial Officer July 21, 2008 July 21, 2008INDEPENDENT REVIEW REPORT TO AUTONOMY CORPORATION PLC
We have been engaged by the company to review the condensed set of financial statements in the interim financial report for the three and six months ended 30 June 2008 which comprises the consolidated income statement, the consolidated balance sheet, the consolidated statement of changes in equity, the consolidated cash flow statement and related notes 1 to 7. We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of interim financial statements.
This report is made solely to the company in accordance with International Standard on Review Engagements 2410 issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The interim financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim financial report in accordance with the Disclosure and Transparency Rules of the United Kingdoms' Financial Services Authority.
As disclosed in note 2, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland ) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom . A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland ) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim financial report for the three and six months ended 30 June 2008 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
Deloitte & Touche LLP Chartered Accountants and Registered Auditor July 21, 2008 Cambridge, UK Financial Media Contacts: Analyst and Investor Contacts: Edward Bridges / Haya Chelhot Peter Goodman, Investor Relations Officer Financial Dynamics Autonomy Corporation plc +44(0)20-7831-3113 +44(0)1223-448-000SOURCE Autonomy Corporation plc
