Autonomy and Its Third Quarter Uptick
October 26, 2009
Autonomy, the search company that has reinvented itself as an enterprise applications giant, reported its third quarter results last week. I think the company will get very close to $700, maybe $800 million, in revenue by the end of calendar 2009. “Autonomy Corporation Plc Announces Results for the Third Quarter and Nine Months Ended September 30, 2009” reported “Record Q3 Results With Strong Organic Growth; Highest Q3 Revenues And Profits in Autonomy’s History; Q3 Revenues Up 51%; Q3 Profit Before Tax (Adjusted)* Up 20% To $64.3 Million”. A bit of poking around revealed nine month revenue of $515 million. Most search vendors are in the $3 to $20 million range. Autonomy is the big dog in this kennel. But the company has been diversifying into hosted services, eDiscovery, and social networking services built into its content management system. I include Autonomy in the Search Trends 2010 briefing, but I am inclined to shift the company into my enterprise applications category. Autonomy remains the premier marketer of content centric software, and it signaled no signs of slowing its pace. Autonomy is a pacesetter. Although its core technology is getting long in the tooth, the firm continues to move quickly and adapt. The approach has given Autonomy a way to grow that its competitors in search and content processing have not been able to emulate. Will Oracle or another search challenged company buy Autonomy? In my opinion, the company may be too expensive but a double dip economic situation might lower that price. IBM and Oracle have made it clear to me that neither has a search solution that can deal with the petascale data flows some companies face.
Stephen Arnold, October 26, 2009
A freebie. Alert the FDIC.
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2 Responses to “Autonomy and Its Third Quarter Uptick”
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Hi Stephen,
While the financials may have been in range, I think they were on the edges and thus most of the coverage I read interpreted Autonomy’s 3Q09 a a disappointment. For example the WSJ says here (http://bit.ly/1mwyH5) that ” … concerns centered on the company’s margin and a big increase in its research and development outlay for a new product, traders said.
Autonomy’s operating margins fell to 34% in the quarter ending Sept. 30, down from 42% a year earlier, hurt by around $20 million of marketing expenditure and $4 million of costs related to the launch of a new software product.”
Bear in mind that question *can’t* be are R&D and marketing good things to invest money in. The question should be how did Autonomy not know that / provide analysts guidance for it when it set guidance in the past? i.e., how do you get surprised by it and/or why in the world would you surprise Wall St. with it?
On size, yes, they’re a big dog in content, following a CA-esque, now Oracle-esque, financial consolidation strategy.
The elephant on the table is that the revenue growth is largely acquired and has little to do with the supposed meaning-based mission. i.e., they talk about Bayes and Shannon and meaning. They sell Verity term license renewals, Zantaz e-discovery services and now Interwoven WCM. Big gap, in my estimation between the story and the revenue stream.
Best,
Dave
Dave – interesting comments. Autonomy has always had a bit of smoke & mirrors in their numbers, but they remain the last big player standing in a competitive space. Sometimes marketing hype trumps all…