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.
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