SAN FRANCISCO, Calif., and Cambridge, U.K., July 22, 2003 (PRIMEZONE) -- Fourteenth Consecutive Quarter of Profitability; Revenues and Net Profits Increase Quarter-on-Quarter and Year-on-Year; Adjusted Net Profits up 95% on Q1 2003
Autonomy's second quarter conference call will be available live on the World Wide Web at www.autonomy.com on Wednesday, July 23, 2003 at 9:30 a.m. BDT/4:30 a.m. EDT/1:30 a.m. PDT
Autonomy Corporation plc (Nasdaq:AUTN), (LSE:AU.), (Nasdaq Europe:AUTN), a global leader in infrastructure software for the extended enterprise, today reported financial results for the second quarter and six months ended June 30, 2003.
Financial Highlights
Three Months Ended
(unaudited)
Results in US$ June 30, March 31, June 30,
2003 2003 2002
($000's except per share)
Revenues $12,954 $11,955 $12,171
Gross profit $12,535 $11,518 $11,886
Gross profit margin 97% 96% 98%
Net profit (GAAP) $1,449 $1,329 $1,192
Net profit (adjusted)* $1,654 $850 $1,545
Profit before tax (GAAP) $1,749 $1,958 $340
Profit before tax (adjusted)* $2,042 $1,274 $696
EPS
- basic $ 0.01 $ 0.01 $ 0.01
- diluted $ 0.01 $ 0.01 $ 0.01
* Adjusted net profit and adjusted profit before tax exclude translational foreign exchange gains and losses, impairment of equity investments and associated tax effects for all periods.
Second Quarter 2003 Corporate Highlights
-- Adjusted net profits up 95% on Q1 2003; adjusted pre-tax
profits up 60% on Q1 2003
-- Operating profits up nearly 7x from Q1 2003
-- Revenues and profits in line with consensus
-- Q2 2003 revenues and net profits increase from Q1 2003 and
Q2 2002
-- Fourteenth consecutive quarter of profitability
-- Profit before tax for Q2 2003 is $1.7 million
-- R&D investment continues with spending up 12% from Q1 2003
and 24% from Q2 2002
-- Launch of AungateTM compliance applications
-- Gross margins remain high at 97%
-- Blue chip Q2 2003 wins include Philips, Fiat, General
Motors, the Bank of England, the Swedish Government, Entergy,
Capital Radio, BDO Stoy Hayward, Verbatim and various U.S.
Federal government agencies
-- OEM program performed well, with five contracts including
agreements with Veritas and EDS
-- Average contract size remains stable at approximately
$330,000
-- Deferred revenue at highest level in three years at $5.1
million, reflecting strong renewals
-- Strong balance sheet with approximately $120 million in
cash
Commenting on the results, Dr. Mike Lynch, Group CEO of Autonomy said today, "We are pleased to announce that our second quarter 2003 results are in-line with market expectations. During a period of general uncertainty, Autonomy's strong performance has allowed us to announce that sales and profits each increased quarter-on-quarter and from Q2 2002, and that Q2 2003 was our fourteenth consecutive quarter of profitability. In the second quarter our award-winning technology was selected by new and existing blue chip customers in a wide variety of industries throughout the world including Philips, Fiat, General Motors, the Bank of England, the Swedish Government, Entergy, Capital Radio, BDO Stoy Hayward and Verbatim and various U.S. Federal government agencies. Our OEM business performed particularly well, including agreements with Veritas and EDS. Our average contract size remained stable at $330,000 as companies continue to recognize the business benefits of our automated infrastructure."
Dr. Lynch continued, "Throughout 2002 and the first half of 2003, Autonomy has continued to increase its investment in R&D up some 12% from last quarter and 24% from a year ago. During the second quarter of 2003 we announced AungateTM, a division of Autonomy offering the world's first automated, solution for enterprise compliance and litigation support. Earlier this month we announced an agreement to acquire Virage, Inc., a leading provider of video and rich media software. The transaction was applauded by independent analysts such as AMR Research who stated that '(Autonomy is) a company that never fails to impress us with its own innovation' and that 'Virage gives (Autonomy) a bigger stake in an emerging market opportunity.' We believe that the addition of the Autonomy and Dremedia technologies into Virage's award-winning products will enable existing and prospective customers to maximize their return-on-investment in video and easily integrate it within the larger enterprise infrastructure. The transaction is expected to be completed late in the third quarter of 2003. Autonomy's consistent profitability has enabled the company to take advantage of the current special opportunities by investing for the future."
Second Quarter and Six Month 2003 Financial Highlights
Revenues for the second quarter totalled $13.0 million, up 8% from $12.0 million for the first quarter of 2003, and up 6% from $12.2 million for the second quarter of 2002. U.S./Asia Pac revenues of $6.4 million were 49% of total revenues and U.K./European revenues totalling $6.6 million were 51% of total revenues in the second quarter of 2003. Revenues for the six months ended June 30, 2003 totalled $24.9 million, down 5% from $26.2 million for the six months ended June 30, 2002.
Gross profits for the quarter were $12.5 million, up 9% from $11.5 million in the first quarter of 2003, and up 5% from $11.9 million in the second quarter of 2002. Second quarter gross margins were 97%, compared to 96% in the first quarter of 2003 and compared to 98% in the second quarter of 2002. Gross profits for six months ended June 30, 2003, were $24.1 million, down 7% from $25.8 million for the six months ended June 30, 2002. Gross margins for the six months ended June 30, 2003, were 97%, compared to 98% for the six months ended June 30, 2002.
Net profit (adjusted) for the second quarter of 2003 was $1.7 million (GAAP -- $1.4 million), or $0.01 per diluted share (adjusted and GAAP), compared to net profit (adjusted) of $0.9 million (GAAP -- $1.3 million), or $0.01 per diluted share (adjusted and GAAP), for the first quarter of 2003 and compared to net profit (adjusted) of $1.5 million (GAAP -- $1.2 million) or $0.01 per diluted share (adjusted and GAAP), for the second quarter of 2002. Adjusted net profit excludes translational foreign exchange gains and losses, impairment of equity investments and associated tax effects for all periods. Net profit for the six months ended June 30, 2003, was $2.8 million, or $0.02 per diluted share, compared to net profit of $4.6 million, or $0.04 per diluted share, for the six months ended June 30, 2002.
Cash balances were $120.3 million at June 30, 2003, a slight decrease from the prior quarter reflecting share repurchases and exceptional pre-payments during the quarter such as annual directors and officers insurance renewals and new marketing programs. During the quarter Autonomy continued its share repurchase program, purchasing for cancellation 2,613,593 shares at an average price of GBP1.73 per share. In total, Autonomy has purchased for cancellation 15,254,644 shares at an average price of GBP1.51 per share.
Despite strong cash collection, accounts receivable days sales outstanding were 136 days for the second quarter of 2003, compared to 134 days for the first quarter of 2003, primarily due to general delays in payment by a European government customer for a significant transaction. Receivables for the second quarter of 2003 were $19.6 million compared to $17.8 million for the first quarter of 2003, and compared to $16.8 million for the second quarter of 2002. Deferred revenues were $9.0 million gross ($5.1 million net) at June 30, 2003, compared with $9.2 million gross ($4.8 million net) at March 31, 2003, and compared with $7.6 million gross ($3.2 million net) at June 30, 2002. The increase in deferred revenues reflects strong support and maintenance renewals. 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. Consequently, the adjusted results exclude charges not reflective of Autonomy's core ongoing operational business, namely, translational foreign exchange gains and losses, impairment of equity investments and associated tax effects. Management uses the adjusted results to assess the financial performance of Autonomy's core business. A reconciliation of adjustments to GAAP is set forth in the tables at the end of this press release.
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 customer wins included: the Bank of England, the Swedish Government, BDO Stoy Hayward, Texas Online, Verbatim and Singapore Polytechnic. Repeat business from existing customers accounted for approximately 32% of revenue for the quarter, and included customers such as Philips, Fiat, the BBC and General Motors, as well as various U.S. Federal government agencies, such as various intelligence agencies and the United States Navy.
Strategic Partnerships and OEMs
Autonomy's OEM Program continued on track during the second quarter, with five contracts, including agreements with Veritas and EDS. OEM-derived revenues for the second quarter of 2003 of $2.4 million accounted for approximately 18% of revenues, compared to $2.2 million for the first quarter of 2003.
Q2 Corporate Developments
During the second quarter of 2003 Autonomy launched Aungate, a division of Autonomy offering the world's first automated, solution for enterprise compliance and litigation support. Founded on Autonomy's unique Intelligent Data Operating Layer (IDOL), Aungate provides a technology platform that integrates with enterprise communications technologies to power real-time analysis of telephone calls, emails and instant messages. Aungate's technology has been tailored to specifically help facilitate compliance and governance discovery and analysis processes, which are now being legislated by the Sarbanes-Oxley Act of 2002, and recommended by the Basel II Accord. Aungate technology will also help to rapidly address the challenges faced within the 80% of financial institutions that do not yet meet existing SEC compliance regulations. Aungate provides an integrated solution to automate the analysis of these unstructured information sources in real time, enabling executives to spot trends in communications and easily pinpoint potential information misuse.
Also during the second quarter of 2003 Autonomy announced the appointment of two new members to its board of directors and a new chairman to its audit committee. Mark Opzoomer, European managing director and regional vice-president of Yahoo!, joined the board as a non-executive director and will serve as Chairman of Autonomy's Audit Committee. Sushovan Hussain, Chief Financial Officer of Autonomy Corporation plc since June 2001, joined the Board as an executive director.
Finally, during the quarter Autonomy was again recognized for its market leadership and unmatched technology. In April 2003, Gartner, Inc., an independent research firm, listed Autonomy as a leader in the Gartner 2003 Enterprise Search Engine Vendor Magic Quadrant.
About Autonomy Corporation plc
Autonomy Corporation plc (Nasdaq:AUTN); (LSE:AU.); (Nasdaq Europe: AUTN) is a global leader in infrastructure software for the enterprise. Autonomy's technology powers applications dependent upon unstructured information including customer relationship management, knowledge management, enterprise portals, enterprise resource planning, online publishing and security applications. Autonomy's customer base includes more than 600 global organizations including AstraZeneca, BAE Systems, Ford, Ericsson, Hutchison 3G, RoyalSunAlliance, Sun Microsystems and public sector agencies including the US Department of Defense, NASA and the US Department of Energy, as well as the UK Government's Department of Trade and Industry and numerous agencies responsible for homeland security related functions. Strategic reseller and OEM partners include leading companies such as ATG, BEA, Business Objects, Computer Associates, Hewlett Packard, IBM Global Services, Vignette, EDS and Sybase. Autonomy has offices worldwide and is on the Web at www.autonomy.com.
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.
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 STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
Three Months Ended Six Months Ended
(unaudited) (unaudited)
June 30, March June 30, June June
2003 31, 2002 30, 30,
2003 2003 2002
Revenues $12,954 $11,955 $12,171 $24,909 $26,247
Cost of (419) (437) (285) (856) (461)
revenues
Gross 12,535 11,518 11,886 24,053 25,786
profit
Operating
expenses:
Research (2,718) (2,429) (2,188) (5,147) (4,208)
and
development
Sales and (6,937) (7,056) (8,650) (13,993) (16,405)
marketing
General (1,868) (1,901) (1,561) (3,769) (2,942)
and
administrat
ive
Total (11,523) (11,386) (12,399) (22,909) (23,555)
operating
expenses
Profit 1,012 132 (513) 1,144 2,231
from
operations
Interest 1,030 1,142 1,209 2,172 2,515
income,
net
Gain (293) 684 (11) 391 214
(loss) on
foreign
exchange
Impairment - - (345) - (345)
of equity
investments
Profit
before
income 1,749 1,958 340 3,707 4,615
taxes and
share of
loss of
associated
company
and
minority
interest
Provision (206) (605) 993 (811) 162
for income
taxes
Share of
loss of (94) (24) (141) (118) (217)
associated
company
and
minority
interest
Net profit $1,449 $1,329 $1,192 $2,778 $4,560
Basic $ 0.01 $0.01 $ 0.01 $0.02 $ 0.04
earnings
per share
Diluted $ 0.01 $0.01 $ 0.01 $0.02 $ 0.04
earnings
per share
Weighted
average 113,746 118,526 127,544 119,396 127,355
ordinary
shares
outstanding
Weighted
average 114,457 118,974 128,667 120,023 128,470
ordinary
shares
outstanding,
assuming
dilution
Reconciliation of Non-GAAP Financial Measures
Three Months Ended
(unaudited)
June 30, March 31, June 30,
2003 2003 2002
Profit before $1,749 $1,958 $340
income taxes
Gain (loss) on 293 (684) 11
foreign exchange
Impairment of - - 345
equity investments
Adjusted profit 2,042 1,274 696
before tax
Tax effect on gain
(loss) on foreign (88) 205 (3)
exchange
Provision for (206) (605) 993
income taxes
Share of loss of
associated (94) (24) (141)
company and
minority interest
Adjusted net profit $1,654 $850 $1,545
The accompanying notes are an integral part of these consolidated financial statements
AUTONOMY CORPORATION plc CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
As at
(unaudited)
June 30, March 31, June 30,
2003 2003 2002
ASSETS
Current assets:
Cash and cash equivalents $120,345 $124,253 $147,969
Accounts receivable, net
of allowances for
doubtful accounts of
$3,357, $3,595 and $2,647 19,642 17,794 16,802
as of June 30, 2003,
March 31, 2003 and June
30,
2002, respectively
Prepaid expenses and 5,096 5,034 5,093
other current assets
Deferred tax asset 652 629 703
Total current assets 145,735 147,710 170,567
Property and equipment 5,167 4,788 4,410
Less accumulated (3,126) (2,846) (2,218)
depreciation
Property and equipment, 2,041 1,942 2,192
net
Intangible assets, net 2,422 769 915
Goodwill, net 4,987 4,759 4,632
Other investments, cost 1,434 1,375 2,651
Deferred tax asset 475 439 -
TOTAL ASSETS $157,094 $156,994 $180,957
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $2,137 $2,299 $1,752
Taxes payable, including - - 380
corporation tax
Accrued expenses 4,251 4,729 6,712
Deferred revenue 5,143 4,774 3,196
Total current liabilities 11,531 11,802 12,040
Shareholders' equity:
Ordinary shares (1) 582 596 662
Additional paid-in 122,643 129,881 159,452
capital
Treasury stock, at cost (1,775) (1,775) -
Retained earnings 12,100 10,651 7,755
Other accumulated 12,013 5,839 1,048
comprehensive income
Total shareholders' 145,563 145,192 168,917
equity
TOTAL LIABILITIES AND $157,094 $156,994 $180,957
SHAREHOLDERS' EQUITY
(1) At June 30, 2003, 600,000,000 ordinary shares of nominal value 1/3 pence each authorized, 112,339,762 issued and outstanding; as of March 31, 2003, 600,000,000 ordinary shares of nominal value 1/3 pence each authorized, 114,948,330 issued and outstanding; as of June 30, 2002, 600,000,000 ordinary shares of nominal value 1/3 pence each authorized, 127,573,070 issued and outstanding.
AUTONOMY CORPORATION plc CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
Three Months Ended Six Months Ended
(unaudited) (unaudited)
June 30, March June June 30, June
2003 31, 30, 2003 30,
2003 2002 2002
Cash flows
from
operating
activities:
Net profit $1,449 $1,329 $1,192 $2,778 $4,560
Adjustments
to
reconcile
net profit
to
net cash,
provided by
operating
activities:
Depreciation 352 271 306 623 539
and
amortization
Share of
loss of
associated 94 24 141 118 217
company and
minority
interest
Impairment - - 345 - 345
of equity
investments
Equity
investment - - - - (825)
received
for
non-cash
consideratio
n
Deferred 99 73 (370) 172 (18)
tax
Foreign 293 (684) 11 (391) (214)
currency
movements
Changes in
operating
assets and
Liabilities:
Accounts (1,255) (3,253) (2,374) (4,508) (2,239)
receivable
Prepaid
expenses (901) 636 (167) (265) (717)
and other
current
assets
Deferred 114 (220) (441) (106) (84)
revenues
Accounts (275) (593) (1,960) (868) (460)
payable
Accrued (948) (767) (3,542) (1,715) (4,410)
expenses
Net cash (978) (3,184) (6,859) (4,162) (3,306)
used in
operating
activities
Cash flows
from
investment
activities:
Purchase of (183) (71) (143) (254) (294)
equipment
Purchase of (390) (36) (171) (426) (829)
intangibles
Purchase of
investments, (7) - - (7) -
net of
cash
acquired
Net cash (580) (107) (314) (687) (1,123)
used in
investing
activities
Cash flows
from
financing
activities:
Purchase of (7,372) (18,449) - (25,821) -
company
shares
Proceeds
from 9 - 53 9 962
issuance of
shares,
net of
issuance
costs
Net cash
(used in) (7,363) (18,449) 53 (25,812) 962
provided by
financing
activities
Effect of
foreign 5,013 (1,479) 9,712 3,534 7,832
exchange on
cash
and cash
equivalents
Net
(decrease) (3,908) (23,219) 2,592 (27,127) 4,365
increase in
cash
and cash
equivalents
Beginning 124,253 147,472 145,377 147,472 143,604
cash and
cash
equivalents
Ending cash $120,345 $124,253 $147,969 $120,345 $147,969
and cash
equivalents
Supplemental
disclosure
of
cash flow
information:
Income $(280) $(159) $(1,165) $(439) $(2,765)
taxes paid
AUTONOMY CORPORATION plc NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
1. Basis of presentation
The accompanying consolidated financial statements of Autonomy Corporation plc ("Autonomy" or the "Company") have been prepared in conformity with United States generally accepted accounting principles, consistent in all material respects with those applied in the Company's financial statements for the year ended December 31, 2002, included in the Company's Annual Report on Form 20-F filed with the United States Securities and Exchange Commission although the Consolidated Financial Statements do not include all information and footnotes required by US GAAP. All 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 and six months ended June 30, 2003, are not necessarily indicative of the operating results for future operating periods. The interim financial statements should be read in connection with the audited Consolidated Financial Statements and the notes thereto for the year ended December 31, 2002, and the risk factors as set forth in the Form 20-F.
2. Geographical information
Three months ended
(Unaudited)
Revenue by June 30, March 31, June 30,
country: 2003 2003 2002
US $5,994 $6,443 $7,855
UK/Europe 6,620 5,415 4,235
Rest of World 340 97 81
Total $12,954 $11,955 $12,171