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 /PRNewswire-FirstCall/ -- 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 Highlights
- Record first quarter revenues of $194.2 million (versus
analysts' consensus of $193 million), up 50% from Q1 2009 including
strong organic growth of 17% [1]
- Gross 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 2009
- Record 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
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[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 Highlights
- Blue 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
Dhabi
- 11 OEM deals signed including new deals and extensions with
Adobe, McAfee and Siemens
- Repeat business accounted for 51% of revenue in Q1
- Strong organic growth of 17% from Q1 2009
- Record Q1 revenue of $194.2 million, up 50% from Q1 2009
- Gross 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
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.
Taxation
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 Profits
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; and
- Purchasing 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.
Supplemental Metrics
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 (<2% of revenues)
Accrued income in normal range (<5% of revenues)
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* 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; and
- Industry-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; and
- Receiving 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 http://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: http://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, Nestle, 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 http://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.
AUTONOMY CORPORATION plc
CONDENSED CONSOLIDATED INCOME STATEMENT
(in thousands, except per share amounts)
Three Months
Ended
(unaudited)
March 31, March 31,
2010 2009
$'000 $'000
Revenues (see note 3).................................. 194,180 129,779
Cost of revenues (excl. amortization)......... (21,542) (12,789)
Amortization of purchased intangibles....... (14,534) (5,354)
Total cost of revenues..................................(36,076) (18,143)
Gross profit............................................158,104 111,636
Operating expenses:
Research and development......................... (27,782) (20,010)
Sales and marketing.................................... (42,900) (28,760)
General and administrative ......................... (17,255) (11,288)
Other costs.............................................
Post-acquisition restructuring costs..... - (846)
Profit (loss) on foreign exchange.......... 2,961 (433)
Total operating expenses............................. (84,976) (61,337)
Profit from operations...................................73,128 50,299
Share of loss of associate........................... (338) (441)
Interest receivable.........................................807 623
Interest payable.........................................(4,797) (504)
Profit before income taxes......................... 68,800 49,977
Income taxes (see note 4)............................ (19,086) (15,461)
Net profit...............................................49,714 34,516
Basic earnings per share (see note 6)...... $ 0.21 $ 0.15
Diluted earnings per share (see note 6).. $ 0.21 $ 0.15
Weighted average number of ordinary shares
outstanding........................................ 240,888 231,704
Weighted average number of ordinary shares
outstanding, assuming dilution of options and
convertible loan notes............. 251,343 235,348
Reconciliation of Adjusted Financial Measures
Three Months Ended
(unaudited)
March 31, March 31,
2010 2009
$'000 $'000
Gross profit ........................................ 158,104 111,636
Amortization of purchased intangibles....... 14,534 5,354
Gross profit (adjusted)..................... 172,638 116,990
Profit before income taxes............................ 68,800 49,977
Amortization of purchased intangibles....... 14,534 5,354
Share-based compensation (see note 5). 1,494 1,124
Post-acquisition restructuring costs........... - 846
(Profit) loss on foreign exchange................ (2,961) 433
Interest payable on convertible loan notes 3,119 -
Share of loss of associate............................ 338 441
Profit before income taxes (adjusted)........ 85,324 58,175
Provision for income taxes........................... (23,670) (17,997)
Net profit (adjusted).................................. 61,654 40,178
Profit from operations........................... 73,128 50,299
Amortization of purchased intangibles....... 14,534 5,354
Share-based compensation (see note 5). 1,494 1,124
Post-acquisition restructuring costs........... - 846
(Profit) loss on foreign exchange................ (2,961) 433
Profit from operations (adjusted)................ 86,195 58,056
AUTONOMY CORPORATION plc
CONDENSED CONSOLIDATED BALANCE SHEET
As at
(unaudited)
March 31, December 31,
2010 2009
$'000 $'000
ASSETS
Non-current assets:
Goodwill.............................................1,343,624 1,287,042
Other intangible assets............................. 401,302 399,277
Property and equipment, net.................... 30,822 33,886
Equity and other investments............................14,599 16,608
Deferred tax asset......................................20,153 24,015
Total non-current assets........................... 1,810,500 1,760,828
Current assets:
Trade receivables, net............................... 211,409 230,219
Other receivables.......................................47,883 45,231
Total trade and other receivables............ 259,292 275,450
Inventory...............................................10,250 486
Cash and cash equivalents..................... 910,876 242,791
Total current assets.................................1,180,418 518,727
TOTAL ASSETS.........................................2,990,918 2,279,555
CURRENT LIABILITIES
Trade payable..........................................(11,639) (14,926)
Other payables.........................................(47,447) (54,517)
Total trade and other payables................ (59,086) (69,443)
Bank loan..............................................(78,163) (52,375)
Tax liabilities........................................(35,201) (43,338)
Deferred revenue......................................(164,557) (164,931)
Provisions..............................................(2,480) (2,731)
Total current liabilities.............................(339,487) (332,818)
Net current assets.....................................840,931 185,909
NON-CURRENT LIABILITIES
Bank loan..............................................(65,922) (145,152)
Convertible loan notes.............................. (644,824) -
Deferred tax liabilities...............................(85,668) (85,087)
Deferred revenue........................................(7,627) (8,576)
Other payables..........................................(2,178) (1,020)
Provisions..............................................(4,618) (5,123)
Total non-current liabilities....................... (810,837) (244,958)
Total liabilities...................................(1,150,324) (577,776)
NET ASSETS.......................................... 1,840,594 1,701,779
Shareholders' equity:
Ordinary shares (1).................................... 1,337 1,333
Share premium account........................... 1,236,511 1,130,767
Capital redemption reserve...................... 135 135
Own shares............................................... (803) (845)
Merger reserve..........................................27,589 27,589
Stock compensation reserve................... 23,411 21,959
Revaluation reserve................................... 1,688 4,499
Translation reserve................................... (26,324) (12,032)
Retained earnings..................................... 577,050 528,374
TOTAL EQUITY.........................................1,840,594 1,701,779
------------
(1) At March 31, 2010, 600,000,000 ordinary shares of nominal value 1/3 pence each authorized, 241,342,371 issued and outstanding; as of December 31, 2009, 600,000,000 ordinary shares of nominal value 1/3 pence each authorized, 240,574,304 issued and outstanding.
AUTONOMY CORPORATION plc
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months
Ended
(unaudited)
March 31, March 31,
2010 2009
$'000 $'000
Cash flows from operating activities:
Profit from operations..................................73,128 50,299
Adjustments for:
Depreciation and amortization...........................26,631 10,543
Share based compensation.................................1,494 1,124
Foreign currency movements..............................(2,961) 433
Post-acquisition restructuring costs.........................- 596
Other non-cash items.........................................- 126
Operating cash flows before movements in working
capital.................................................98,292 63,121
Changes in operating assets and liabilities
(net of impact of acquisitions):
Receivables..............................................1,578 (8,492)
Inventories.............................................(9,767) 247
Payables............................................... (4,627) (3,735)
Cash generated by operations............................85,476 51,141
Income taxes paid......................................(23,780) (10,781)
Net cash provided by operating activities...............61,696 40,360
Cash flows from investment activities:
Interest received..........................................221 623
Purchase of property, plant and equipment..............(17,623) (4,073)
Purchase of investments.................................(2,500) (980)
Expenditure on product development......................(6,573) (3,284)
Acquisition of subsidiaries, net of cash acquired.... (55,952) (610,763)
Net cash used in investing activities..................(82,427) (618,477)
Cash flows from financing activities:
Proceeds from issuance of shares, net of issuance
costs....................................................7,165 7,755
Proceeds from share placing, net of issuance
costs........................................................- 308,512
Proceeds from convertible loan notes,
net of issuance costs..................................765,912 -
Interest on bank loan.................................. (1,272) (201)
Repayment of bank loan.................................(53,906) -
Drawdown of bank loan........................................- 200,000
Payment of arrangement fee...................................- (3,500)
Net cash provided by financing activities..............717,899 512,566
Net increase (decrease) in cash and cash
equivalents............................................697,168 (65,551)
Beginning cash and cash equivalents....................242,791 199,218
Effect of foreign exchange on cash and cash
equivalents............................................(29,083) (1,352)
Ending cash and cash equivalents.......................910,876 132,315
AUTONOMY CORPORATION plc
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Three Months
Ended
(unaudited)
March 31, March 31,
2010 2009
$'000 $'000
Net profit..............................................49,714 34,516
Revaluation of equity investment........................(2,811) 1,394
Translation of overseas operations.....................(14,292) 62
Other comprehensive income.............................(17,103) 1,456
Total comprehensive income..............................32,611 35,972
AUTONOMY CORPORATION plc
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Capital
Ordinary Share redemption Own Merger
shares premium reserve shares reserve Sub-total
$'000 $'000 $'000 $'000 $'000 $'000
At January 1, 2010.... 1,333 1,130,767 135 (845) 27,589 1,158,979
Retained profit............- - - - - -
Other comprehensive
income.....................- - - - - -
Stock compensation....... - - - - - -
Share options exercised 4 7,929 - - - 7,933
EBT options exercised... - - - 42 42
Equity element of
convertible loan notes.... - 97,815 - - - 97,815
Deferred tax on stock
options...... - - - - - -
At March 31, 2010......1,337 1,236,511 135 (803) 27,589 1,264,769
Sub-total Stock Reval- Trans-
comp'n uation lation Retained
Forwarded reserve reserve reserve earnings Total
$'000 $'000 $'000 $'000 $'000 $'000
At January 1, 2010.. 1,158,979 21,959 4,499 (12,032) 528,374 1,701,779
Retained profit..............- - - - 49,714 49,714
Other comprehensive
income.......................- - (2,811) (14,292) - (17,103)
Stock compensation....... - 1,494 - - - 1,494
Share options exercised 7,933 - - - - 7,933
EBT options exercised... 42 (42) - - - -
Equity element of
convertible loan notes..97,815 - - - - 97,815
Deferred tax on
stock options...... - - - - (1,038) (1,038)
At March 31, 2010....1,264,769 23,411 1,688 (26,324) 577,050 1,840,594
AUTONOMY CORPORATION plc
NOTES TO THE CONDENSED SET OF CONSOLIDATED FINANCIAL STATEMENTS FOR THE
THREE MONTHS ENDED MARCH 31, 2010 - UNAUDITED
1. General information
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, 2010, are not necessarily indicative of the operating results for future operating periods. The quarterly 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, 2009. The information for the year ended December 31, 2009 does not constitute statutory accounts as defined in section 435 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
2. Accounting policies
Whilst the financial information included in this quarterly announcement has been computed in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union, this announcement does not itself contain all of the disclosures required by IFRSs.
Basis of preparation
The same accounting policies, presentation and methods of computation are followed in the condensed set of consolidated financial statements as applied in the group's 2009 Annual Report, except for as described below.
Adoption of new and current standards
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's financial statements for the year ended 31 December 2009, except for the adoption of new standards and interpretations. In the current financial year, the Group has adopted International Financial Reporting Standard 3 (Revised 2008) "Business Combinations" and International Accounting Standard 27 (Revised 2008) "Consolidated and Separate Financial Statements" as required, and will apply these principles throughout the year. Adoption of these standards did not have any significant effect on the financial position or performance of the Group.
Going Concern
The group has considerable financial resources together with a significant number of customers across different geographic areas and industries. At March 31, 2010 the group had cash balances of $911 million and total debt of $789 million. The group has no net debt. As a consequence, the directors believe that the group is well placed to manage business risks successfully despite the current uncertain economic outlook.
After making enquiries and considering the cash flow forecasts of the group the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the twelve month and quarterly consolidated financial statements
Adjusted Results
Although IFRS disclosure provides investors and management with an overall view of the company's financial performance, Autonomy believes that it is important for investors to also understand the performance of the company's fundamental business without giving effect to certain specific, non-recurring and non-cash charges. Consequently, the non-IFRS (adj.) results exclude share of profit/loss of associates, post-acquisition restructuring costs and non-cash charges for the amortization of purchased intangibles, share-based compensation, non-cash translational foreign exchange gains and losses and associated tax effects. Management uses the adjusted results to assess the financial performance of the company's operational business activities.
See reconciliations on page 5.
3. Segmental information
The Company is organized internally along group function lines with each line reporting to the group's chief operating decision maker, the Chief Executive Officer. The primary group function lines include: finance; operations, including legal, HR and operations; marketing; sales; and technology. Each of these functions supports the overall business activities, however they do not engage in activities from which they earn revenues or incur expenditure in their operations with each other. No discrete financial information is produced for these function lines. The company integrates acquired businesses and products into the Autonomy model such that separate financial data on these entities is not maintained post acquisition.
The group has operations in various geographic locations however no discrete financial information is maintained on a regional basis. Decisions around the allocation of resources are not determined on a regional basis and the chief operating decision maker does not assess the group's performance on a geographic basis.
The group is a software business that utilises its single technology in a set of standard products to address unique business problems associated with unstructured data. The group offers over 500 different functions and connectors to over 400 different data repositories as part of its product suite. Each customer selects from a list of options, but underneath from a single unit of the proprietary core technology platform. As a result, no analysis of revenues by product type can be provided.
Each of the group's virtual brands is founded on the group's unique Intelligent Data Operating Layer (IDOL), the group's core infrastructure for automating the handling of all forms of unstructured information. Separate financial information is not prepared for each virtual brand to assess its performance for the purpose of resource allocation decisions. The pervasive nature of the group's technology across each brand requires decisions to be taken at the group level and financial information is prepared on that basis.
A significant proportion of the group's cost base is fixed and represents payroll and property costs which relate to the multiple function lines of the group. As a result the business model drives enhanced performance though growing sales and accordingly group wide revenue generation is the key performance metric that is monitored by the chief operating decision maker. The revenue financial data used to monitor performance is prepared and compiled on a group wide basis. No separate revenue financial analysis is maintained on revenues from any of the virtual brands.
The Company's chief operating decision maker is the group's Chief Executive Officer, who evaluates the performance of the Company on a group wide basis and any elements within it on the basis of information from junior executives and group financial information and is ultimately responsible for entity-wide resource allocation decisions.
As a consequence of the above factors the group has one operating segment in accordance with IFRS 8 "Operating Segments". IFRS 8 also requires information on a geographic basis and that information is shown below.
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 tables provide an analysis of the group's sales and net assets by geographical market based upon the location of the group's customers.
Three Months
Ended
(unaudited)
March March
31, 31,
2010 2009
Revenue by region: $'000 $'000
Americas.................................................135,595 85,183
Rest of World.............................................58,585 44,596
Total....................................................194,180 129,779
Information about these geographical regions is presented below:
Three Months Ended
(unaudited)
March 31, 2010 March 31, 2009
Americas ROW Total Americas ROW Total
$'000 $'000 $'000 $'000 $'000 $'000
Result by region.........55,484 14,683 70,167 38,529 13,049 51,578
Post-acq'n restr. costs.. - (846)
Profit (loss) on foreign
exch.................................... 2,961 (433)
Operating profit................ 73,128 50,299
Share of loss of
associate.......................... (338) (441)
Interest receivable........... 807 623
Interest payable............... (4,797) (504)
Profit before tax................ 68,800 49,977
Tax....................................(19,086) (15,461)
Profit for the period.......... 49,714 34,516
4. Income taxes
Three Months
Ended
(unaudited)
March March
31, 31,
2010 2009
Tax charge by region: $'000 $'000
UK.........................................................13,399 7,443
Foreign................................................. 5,687 8,018
Total......................................................19,086 15,461
5. Share based compensation
Share based compensation charges have been charged in the consolidated income statement within the following functional areas:
Three Months
Ended
(unaudited)
March March
31, 31,
2010 2009
Tax charge by region: $'000 $'000
Research and development......................................401 302
Sales and
marketing.....................................................733 551
General and administrative....................................360 271
Total share based compensation charge.................. 1,494 1,124
6. Earnings per share
The calculation of the basic and diluted earnings per share is based on
the following data:
Three Months
Ended
(unaudited)
March March
31, 31,
2010 2009
Tax charge by region: $'000 $'000
Earnings for purpose of basic earnings per share, being net
profit.....................................................49,714 34,516
Effect of dilutive potential ordinary shares:
Interest on convertible loan notes (net of tax).............2,254 -
Earnings for the purposes of diluted earnings per share
(IFRS).....................................................51,968 34,516
Number of shares
Weighted average number of ordinary shares for the
purposes of basic earnings per share......................240,888 231,704
Effect of dilutive potential ordinary shares:
Share options...............................................3,231 3,644
Convertible loan notes......................................7,224 -
Weighted average number of ordinary shares for the purposes
of diluted earnings per share.............................251,343 235,348
Earnings per share (adj.) is calculated by dividing the net profit (adj.) amounts shown on page 5 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 financial period.
INDEPENDENT REVIEW REPORT TO AUTONOMY CORPORATION PLC
We have been engaged by the company to review the condensed set of financial statements in the quarterly financial report for the three months ended March 31, 2010, which comprises the condensed consolidated income statement, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of cash flows and related notes 1 to 7. We have read the other information contained in the quarterly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with International Standard on Review Engagements 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" 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 quarterly financial report is the responsibility of, and has been approved by, the directors.
As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with the recognition and measurement criteria of IFRSs as adopted by the European Union. The condensed set of financial statements included in this quarterly financial report has been prepared in accordance with the accounting policies the group intends to use in preparing its next annual financial statements.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the quarterly 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 quarterly 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 accompanying quarterly financial information is not prepared, in all material respects, in accordance with the recognition and measurement criteria of IFRSs as adopted for use in the EU and the basis set out in note 2.
Deloitte LLP
Chartered Accountants and Statutory Auditors
April 21, 2010
Cambridge, UK
Financial Media Contacts: Analyst and Investor Contacts:
Edward Bridges / Haya Herbert-Burns Marc Geall, Head of IR and Corporate
Financial Dynamics Strategy
+44(0)20-7831-3113
Autonomy Corporation plc
+44(0)1223-448-000
SOURCE Autonomy Corporation plc
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