AUTONOMY CORPORATION PLC ANNOUNCES RESULTS FOR THE
FIRST QUARTER ENDED MARCH 31, 2005
Record Q1 Revenues up 13% and Profit Before Tax up 113% year-on-year
Autonomy's first quarter conference call will be available live on the World Wide Web at www.autonomy.com on Wednesday, April 20, 2005 at 9:30 a.m. BST/4:30 a.m. EST/1:30 a.m. PST
CAMBRIDGE, England—April 20, 2005—Autonomy Corporation plc (LSE: AU. or AUTN.L), a global leader in infrastructure software for the extended enterprise, today reported financial results for the first quarter ended March 31, 2005.
Financial Highlights
| | Three Months Ended | ||||||
|---|---|---|---|---|---|---|---|
| | March 31, 2005 | March 31, 2004 | |||||
| | $'000 | $'000 | |||||
| | (unaudited) | ||||||
| Results in US$ ($'000s except per share) | |||||||
| Revenues | 18,529 | 16,364 | |||||
| Gross profit (adjusted)* | 17,734 | 15,594 | |||||
| Gross profit margin (adjusted)* | 96 | % | 95 | % | |||
| Profit before tax (adjusted)* | 4,404 | 2,692 | |||||
| Net profit (adjusted)* | 3,204 | 2,241 | |||||
Gross profit (IFRS)** | 17,522 | 15,379 | |||||
| Gross profit margin (IFRS) | 95 | % | 94 | % | |||
| Profit before tax (IFRS) | 3,818 | 1,791 | |||||
| Net profit (IFRS) | 2,693 | 1,515 | |||||
EPS | |||||||
| —basic (adjusted)* | $ | 0.03 | $ | 0.02 | |||
| —diluted (adjusted)* | $ | 0.03 | $ | 0.02 | |||
—basic (IFRS) | $ | 0.02 | $ | 0.01 | |||
| —diluted (IFRS) | $ | 0.02 | $ | 0.01 | |||
First Quarter 2005 Highlights
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Commenting on the results, Dr. Mike Lynch, group CEO of Autonomy said, "We are pleased to announce Autonomy's continued strong performance with record Q1 results, and revenues and profits ahead of the top-end of the market consensus range. This has been achieved despite a historic pattern of Q1 being seasonally less strong than the preceding Q4."
Dr. Lynch continued, "The success in Q1 2005 is driven by strong organic growth and follows on from a similarly strong performance in Q4 2004. Our strong sales results were underpinned by continued adoption of our IDOL 5.0 resulting in a superb win rate over competitors as the limitations of legacy keyword search technologies continue to be exposed. Q1 2005 wins included multiple sales to AOL for search and rich media processing, with Autonomy selected over previously chosen technology; Nokia replacing a legacy technology and won over other keyword technologies which could not scale security handling; and extended enterprise standard contracts with Vodafone, for new applications and thousands of new users; and Hutchison 3G, bringing the power of Autonomy to their 3G handsets in Ireland. The high operational gearing inherent in our business model has ensured that operating margins have surged as revenues have grown with the consequential beneficial effect on our bottom line performance."
Dr. Lynch concluded, "We're also quite pleased that this morning we announced an agreement to acquire etalk Corporation, a U.S.-based leading provider of contact center software solutions that improve the quality of customer interactions. For more details please see the accompanying press release. The transaction will further extend Autonomy's IDOL 5.0 platform into the contact center software market, enabling etalk's customer base of over 1,500 contact centers and 35 of the Fortune 100 companies to gain access to the world's leading technology, offering them a competitive edge over any other solution, based on Autonomy's unique ability to understand the content of the call."
First Quarter 2005 Financial Highlights
Revenues for the first quarter totalled $18.5 million, up 13% from $16.4 million for the first quarter of 2004. U.S./Asia Pac revenues of $9.0 million were 48% of total revenues and U.K./European revenues totalling $9.6 million were 52% of total revenues in the first quarter of 2005.
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Gross profits (adjusted) for the quarter were $17.7 million, up 13% from $15.6 million in the first quarter of 2004. First quarter gross margins (adjusted) were 96%, compared to 95% in the first quarter of 2004. Gross profits (IFRS) for the quarter were $17.5 million, up 13% from $15.4 million in the first quarter of 2004. First quarter gross margins (IFRS) were 95%, compared to 94% in the first quarter of 2004.
Net profit (adjusted) for the first quarter of 2005 was $3.2 million, or $0.03 per diluted share, compared to net profit (adjusted) of $2.2 million, or $0.02 per diluted share, for the first quarter of 2004. Net profit (IFRS) for the first quarter of 2005 was $2.7 million, or $0.02 per diluted share, compared to net profit (IFRS) of $1.5 million, or $0.01 per diluted share, for the first quarter of 2004.
Cash balances were $104.6 million at March 31, 2005, a decrease of $2.2 million in the quarter reflecting a combination of operational cash inflow offset by share repurchases and translational foreign exchange effects. During the quarter Autonomy continued its share repurchase program, purchasing for cancellation 326,359 shares at an average price of £1.93 per share. In total, Autonomy has purchased for cancellation 20,730,241 million shares at an average price of £1.64 per share. Accounts receivable days sales outstanding increased to 122 days for the first quarter of 2005, compared to 104 days for the first quarter of 2004. Receivables for the first quarter were $25.6 million, compared to $20.4 million for the first quarter of 2004. Deferred revenues were at $5.8 million net at March 31, 2005, compared with $6.4 million net at March 31, 2004.
Although GAAP 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 non-cash charges. Consequently, the non-GAAP results exclude charges not reflective of Autonomy's core ongoing operational business, 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.
Q1 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: Nokia, Associated Press, Louis Vuitton, Finmeccanica, HBO, Houston Chronicle and New York Magazine. Repeat business from existing customers accounted for approximately 30% of revenue for the quarter, and included customers such as AOL, Vodafone, Watson Wyatt, Hutchison 3G Ireland, Danske Bank, the BBC, FranceTV 2 and State Farm Insurance, as well as various governmental and intelligence agencies such as U.K. Royal Air Force, U.S. Department of Energy, U.S. Nuclear Regulatory Commission, Shanghai local government and U.S. National Archives.
Strategic Partnerships and OEMs
Autonomy's OEM Program was on target during the first quarter with OEM-derived revenues for the first quarter of 2005 of $3.2 million accounting for approximately 17% of revenues, compared to $3.0 million for the first quarter of 2004, and new OEM agreements with major software companies.
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Q1 Corporate Developments
During the first quarter Autonomy unveiled its new IDOL IP Television Suite, supporting the delivery of video on demand and bringing the power of Autonomy's award-winning enterprise technology to television, video and audio assets across the Internet. Autonomy's new IDOL IPTV Suite allows the automatic processing and retrieval of television, video and audio content, from any source including over-the-air broadcasts and free internet content, has already been successfully implemented by internet search specialist blinkx in their internet TV service at http://www.blinkx.tv. Also during the first quarter Autonomy's Aungate division, Autonomy's award-winning division specializing in compliance, litigation and risk technology, extended its product suite with the addition of the "Ijen Module' to power fraud analysis and money laundering detection.
Also during the first quarter Autonomy was recognized in multiple ways for its market leadership and unmatched technology. Autonomy was selected as one of KM World's "Top 100 Companies that Matter in Knowledge Management" for the fifth straight year. As selected by KM World's editorial staff, the Top 100 identifies companies who are leading the way in knowledge management through their velocity of innovation and impact on the market in 2005. Finally, Autonomy's Audentify division, a leading provider of next-generation contact center technology, was awarded 2004 Product of the Year Award by Technology Marketing Corporation (TMC™)'s Customer Inter@ction Solutions Magazine, the publications' highest honor recognizing exemplary contributions and innovative products that advance the call center and CRM industry.
About Autonomy Corporation plc
Autonomy Corporation plc (LSE: AU. or AUTN.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 includes more than 1,000 global companies 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, Citrix, Computer Associates, EDS, IBM Global Services, Novell, Novient, Veritas, Vignette, Supportsoft and Sybase. The company has offices worldwide.
The Autonomy Group includes: Aungate, a leading supplier of electronic communications management technology for regulatory compliance in the enterprise; Audentify, a leading supplier of next-generation contact center technology; and Virage, a leading provider of rich media communication and content management software
Caution Concerning Forward-Looking Statements
With the exception of historical information, the matters set forth in this news release are forward-looking statements that involve risks and uncertainties. A number of important factors could cause actual results to differ materially from those in the forward-looking statements. These factors include, among others, technology risks, including dependence on core technology; fluctuations in quarterly results; dependence on new product development; rapid technological and market change; reliance on sales by others; management of growth; dependence on key personnel; rapid expansion; growth of the Internet; financial risk management; and future growth subject to risks. These factors and other factors which could cause actual results to differ materially are also discussed in the company's filings with the United States Securities and Exchange Commission, including Autonomy's latest Annual Report on Form 20-F.
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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: Edward Bridges Financial Dynamics +44 (0)20 7831 3113 | Analyst and Investor Contacts: Sushovan Hussain, Chief Financial Officer Autonomy Corporation plc +44 (0)1223 448 000 |
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AUTONOMY CORPORATION plc
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
| | Three Months Ended | ||||||
|---|---|---|---|---|---|---|---|
| | March 31, 2005 | March 31, 2004 | |||||
| | $'000 | $'000 | |||||
| | (unaudited) | ||||||
| Revenues | 18,529 | 16,364 | |||||
| Cost of revenues | (795 | ) | (770 | ) | |||
| Amortization of purchased intangibles | (212 | ) | (215 | ) | |||
| Gross profit | 17,522 | 15,379 | |||||
| Operating expenses: | |||||||
| Research and development | (3,050 | ) | (3,404 | ) | |||
| Sales and marketing | (8,944 | ) | (8,249 | ) | |||
| General and administrative | (2,444 | ) | (2,047 | ) | |||
| Share-based compensation | (123 | ) | (104 | ) | |||
| Total operating expenses | (14,561 | ) | (13,804 | ) | |||
| Profit from operations | 2,961 | 1,575 | |||||
| Interest income | 1,108 | 798 | |||||
| Loss on foreign exchange | (251 | ) | (582 | ) | |||
| Profit before benefit for income taxes | 3,818 | 1,791 | |||||
| Income taxes | (1,125 | ) | (276 | ) | |||
| Net profit | 2,693 | 1,515 | |||||
Basic earnings per share | $ | 0.02 | $ | 0.01 | |||
| Diluted earnings per share | $ | 0.02 | $ | 0.01 | |||
| Weighted average ordinary shares outstanding | 108,043 | 111,008 | |||||
| Weighted average ordinary shares outstanding, assuming dilution | 108,177 | 113,534 | |||||
Reconciliation of Non-GAAP Financial Measures
| | Three Months Ended | ||||
|---|---|---|---|---|---|
| | March 31, 2005 | March 31, 2004 | |||
| | $'000 | $'000 | |||
| | (unaudited) | ||||
| Profit before income taxes | 3,818 | 1,791 | |||
| Loss on foreign exchange | 251 | 582 | |||
| Amortization of purchased intangibles | 212 | 215 | |||
| Share-based compensation | 123 | 104 | |||
| Profit before tax (adjusted) | 4,404 | 2,692 | |||
| Tax effect on loss on foreign exchange | (75 | ) | (175 | ) | |
| Provision for income taxes | (1,125 | ) | (276 | ) | |
| Net profit (adjusted) | 3,204 | 2,241 | |||
The accompanying notes are an integral part of these financial statements
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AUTONOMY CORPORATION plc
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
| | As at | ||||
|---|---|---|---|---|---|
| | March 31, 2005 | March 31, 2004 | |||
| | $'000 | $'000 | |||
| | (unaudited) | ||||
| ASSETS | |||||
| Non-current assets: | |||||
| Property and equipment | 8,676 | 8,672 | |||
| Less accumulated depreciation | (5,362 | ) | (5,161 | ) | |
| Property and equipment, net | 3,314 | 3,511 | |||
| Goodwill | 30,247 | 31,014 | |||
| Other intangible assets | 4,043 | 4,449 | |||
| Equity and other investments | 2,408 | 2,353 | |||
| Deferred tax asset | 432 | 911 | |||
| Total non-current assets | 40,444 | 42,238 | |||
| Current assets: | |||||
| Trade receivables, net of allowances for doubtful accounts of $4,627 and $3,197 as of December 31, 2004, respectively | 25,290 | 20,424 | |||
| Other receivables | 3,236 | 3,395 | |||
| Trade and other receivables | 28,526 | 23,819 | |||
| Deferred tax asset | 4,658 | 6,246 | |||
| Cash and cash equivalents | 104,608 | 106,793 | |||
| Total current assets | 137,792 | 136,858 | |||
| TOTAL ASSETS | 178,236 | 179,096 | |||
CURRENT LIABILITIES | |||||
| Trade payables | 1,202 | 1,954 | |||
| Other payables | 5,397 | 4,525 | |||
| Total trade and other payables | 6,599 | 6,479 | |||
| Tax liabilities | 586 | — | |||
| Deferred revenue | 5,777 | 5,667 | |||
| Total current liabilities | 12,962 | 12,146 | |||
| NET ASSETS | 165,274 | 166,950 | |||
Shareholders' equity: | |||||
| Share capital (1) | 557 | 557 | |||
| Share premium account | 118,156 | 117,778 | |||
| ESPOS reserve | (1,775 | ) | (1,775 | ) | |
| Share compensation reserve | 774 | 651 | |||
| Capital redemption reserve | 133 | 131 | |||
| Retained earnings | 21,535 | 18,965 | |||
| Currency translation reserves | 25,894 | 30,643 | |||
| TOTAL EQUITY | 165,274 | 166,950 | |||
The accompanying notes are an integral part of these financial statements
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AUTONOMY CORPORATION plc
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| | Three Months Ended | ||||||
|---|---|---|---|---|---|---|---|
| | March 31, 2005 | March 31, 2004 | |||||
| | $'000 | $'000 | |||||
| | (unaudited) | ||||||
| Cash flows from operating activities: | |||||||
| Profit from operations | 2,961 | 1,575 | |||||
| Interest income | 1,108 | 798 | |||||
| Loss on foreign exchange | (251 | ) | (582 | ) | |||
| Income taxes | (1,125 | ) | (276 | ) | |||
| Depreciation and amortization | 735 | 567 | |||||
| Income tax benefits from exercise of non-qualified stock options | — | 97 | |||||
| Deferred tax | (108 | ) | (91 | ) | |||
| Share-based compensation | — | 104 | |||||
| Foreign currency movements | 20 | 582 | |||||
| Changes in operating assets and liabilities (net of impact of acquisitions): | |||||||
| Accounts receivable | (5,717 | ) | (334 | ) | |||
| Prepaid expenses and other current assets | 2,287 | 797 | |||||
| Deferred revenues | 91 | 747 | |||||
| Accounts payable and taxes payable | (1,673 | ) | 376 | ||||
| Accrued expenses and other liabilities | 2,846 | (1,704 | ) | ||||
| Net cash provided by operating activities | 1,174 | 2,656 | |||||
Cash flows from investment activities: | |||||||
| Purchase of equipment | (132 | ) | (315 | ) | |||
| Purchase of intangibles | (131 | ) | — | ||||
| Disposal of intangibles | — | 459 | |||||
| Purchase of investments | (111 | ) | 6 | ||||
| Net cash (used in) provided by investing activities | (374 | ) | 150 | ||||
Cash flows from financing activities: | |||||||
| Proceeds from issuance of shares, net of issuance costs | 257 | 1,365 | |||||
| Purchase of company shares | (1,192 | ) | — | ||||
| Net cash (used in) provided by financing activities | (935 | ) | 1,365 | ||||
| Effect of foreign exchange on cash and cash equivalents | (2,050 | ) | 1,651 | ||||
| Net (decrease) increase in cash and cash equivalents | (2,185 | ) | 5,822 | ||||
| Beginning cash and cash equivalents | 106,793 | 102,250 | |||||
| Ending cash and cash equivalents | 104,608 | 108,072 | |||||
Supplemental disclosure of cash flow information: | |||||||
| Income taxes paid | (17 | ) | (361 | ) | |||
The accompanying notes are an integral part of these financial statements
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AUTONOMY CORPORATION plc
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—UNAUDITED
1. Basis of presentation
The accompanying condensed consolidated financial statements of Autonomy Corporation plc have been prepared in conformity with International Financial Reporting Standards ("IFRS"). In accordance with the rules of the London Stock Exchange and applicable legislation, Autonomy is required to adopt IFRS for accounting periods beginning on January 1, 2005. Quarterly information is unaudited, but reflects all normal adjustments which are, in the opinion of management, necessary to provide a fair statement of results and the company's financial position for and as at the periods presented. The results of operations for the three months ended March 31, 2005, are not necessarily indicative of the operating results for future operating periods. The 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, 2004.
2. Reconciliation between U.S. GAAP and IFRS GAAP
A reconciliation between IFRS GAAP and U.S, GAAP for the three months ended March 31, 2005 and 2004, is shown below:
| | Three Months Ended | ||||
|---|---|---|---|---|---|
| | March 31, 2005 | March 31, 2004 | |||
| | $'000 | $'000 | |||
| | (unaudited) | ||||
| Shareholders' equity (U.S. GAAP) | 165,124 | 164,859 | |||
| Tax on vested share options | 479 | 865 | |||
| Elimination of cost from intangibles | (329 | ) | — | ||
| Shareholders' equity (IFRS GAAP) | 165,274 | 165,724 | |||
Profit after tax (U.S. GAAP) | 2,816 | 1,528 | |||
| Share-based compensation | (123 | ) | (13 | ) | |
| Net profit (IFRS GAAP) | 2,693 | 1,515 | |||
With regards to the adjustments set forth above, under IFRS, all equity settled share-based payments granted after November 7, 2002, that are not vested at December 31, 2004, are measured at their fair value as determined by the Black Scholes option pricing model. Compensation cost net of tax is then recognised over the vesting period of the awards. Under US GAAP, stock options granted to employees are measured as the excess, if any, of the market value of the stock at the date of grant over the amount that has to be paid to acquire the stock.
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3. Geographical information
| | Three Months Ended | |||
|---|---|---|---|---|
| | March 31, 2005 | March 31, 2004 | ||
| | $'000 | $'000 | ||
| | (unaudited) | |||
| Revenue by country: | ||||
| US | 8,672 | 7,946 | ||
| UK/Europe | 9,556 | 7,900 | ||
| Rest of World | 301 | 518 | ||
| Total | 18,529 | 16,364 | ||
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