Autonomy Hits $740 Million in Revenues
February 4, 2010
The lads from Cambridge have, according to the Denver Business Journal, hit $740 million in revenue. You must read “Autonomy corporation plc Announces Results for the 12 Months and Fourth Quarter Ended December 31, 2009.” The addled goose points out that Autonomy is a heck of a marketing company. Now its approach to growth is paying off. Google does a good job staying in the headlines, but its financials don’t shed much light on its revenues from the Google Search Appliance. Microsoft Fast search revenues are even more difficult to discern. Oracle and search are the most difficult to pin down. Endeca is privately held, so the figures circulating for that firm are tough to validate. Most of the other players in the enterprise search sector are working to catch up with Autonomy, but that will be hard for three reasons:
First, Autonomy grows via an inorganic method. The firm buys a content sector and then converts that firm to the Autonomy way of processing information. The result is an increase in sales opportunities plus whatever upside in cash and revenues accrue from the deal. Autonomy is better at this game than OpenText, which has a similar approach.
Second, Autonomy has a wide range of market sectors into which it can push its products and services and from which it can take great ideas and offer them to existing Autonomy clients. A good example is the Zantaz business which put Autonomy in the hosted services business.
Third, and it is a repetitive point, Autonomy is a savvy marketer. The company has a track record of sniffing trends and moving quickly.
There are some issues that I have noted in my write ups for clients and my search studies. With each acquisitions, Autonomy’s engineers have more integration and other fiddly code tweaks to undertake. Go too quickly and Autonomy gets in front of the market. Go too slowly and Autonomy has to spend to play catch up. This is a balancing act and so far Autonomy has been doing an okay job.
In addition, there is a large installed base of Verity, Autonomy, Interwoven, and other software plumbing. Customer support is one challenge. The other is that some competitors can focus resources on a particular client of niche and deliver a combination of price and quality that can siphon off some accounts. So far Autonomy has been able to handle these thrusts, but going forward, one of these competitors might find a way to take some bites out of market sector that Autonomy is unable to keep in the stable.
Finally, there is the pressure to make sales. This can fatigue marketing people who must create compelling messages, clients who must listen to sales presentations, and sales professionals who have to bring home the new accounts. Once again Autonomy has been able to keep its sales force focused, but as the company grows larger, plain old management becomes an ever larger challenge.
When will Autonomy hit $1.0 billion in revenue? When it makes its next big acquisition. Rumors are floating around the goose pond as I write this. Honk.
Stephen E Arnold, February 4, 2010
No one paid me to write down these obvious comments about the financial and managerial health of Autonomy. I will report non compensation to the National Institutes of Health.
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And let’s note that a LOT of Autonomy’s revenues are not search either. They have acquired a number of app solutions that generate significant revenue. The same goes for the other vendors mentioned. Its very difficult to segment things out. But didn’t we say that search would someday become ubiquitous? On with progress….