Ireland’s first software billionaire’s US$415m first half

22 Jul 2010

A technology company started by Tipperary native Dr Mike Lynch with a stg£2,000 loan is on its way to becoming a US$1bn a year business.

Autonomy Corporation, a global leader in IT infrastructure software headquartered in Cambridge in the UK, today reported six-month revenues of US$415.3m, up 28pc on last year.

The company reported overall organic growth of 14pc. Gross profits were up 26pc on last year to US$363.4m.

Cambridge-based and London Stock Exchange-listed Autonomy develops infrastructure technology that has been adopted by enterprises to process information across all internal and external data sources and counts customers such as US federal government agencies, Cisco Systems, the US Library of Commerce, ABN Amro, Forbes, Johnson & Johnson and Banco de Espana.

In 2007, Autonomy acquired Belfast-based enterprise software company Meridio for US$40.8m.

Dr Lynch set up Autonomy in 1996 as a spinoff from his first company, Cambridge Neurodynamics, which began with a personal loan. In 2006, the company turned in revenues of US$250m for the year. At one point in Autonomy’s history, the company had a market capitalisation of £8bn sterling.

Commenting on today’s results, Dr Lynch said: “The first half of 2010 continued to show a gentle recovery with discretionary spend continuing. In considering the macro environment, our customers are positive but still cautious. We saw continued positive moves in the ‘Power’ and OEM parts of our business. The ‘Promote’ area is starting to convert its great promise into sales as a lot of pre-recovery work is being undertaken by our customers and the ‘Protect’ part of the business has seen a number of high-profile corporate and regulatory events underpin its continuing strength.

“The ability to understand the meaning of information and breadth of capabilities IDOL offers on a single platform meant that our competitive position remains strong and was recently recognised by independent analysts at IDC, who acknowledged Autonomy to be the world’s leading provider of archiving, search and discovery solutions.”

Dr Lynch continued: “The OEM business continues to be our fastest-growing revenue stream, and we see a powerful networking effect under way as IDOL further penetrates the entire spectrum of enterprise software applications. The shift to new delivery models is ongoing and Autonomy continues to operate the world’s largest private cloud computing platform, with SaaS contributing over a quarter of Group revenues in the first half of 2010.

“We also continue to see a growing interest in our ‘Promote’ solutions and we now see multi-million dollar deals in the pipeline for Meaning Based Marketing, where we believe there is pent-up demand. The strategic success of the recent MicroLink acquisition has already become apparent with a multi-million dollar contract signed directly with a US federal customer during the second quarter. Our government business, which is mainly focused on national security, has proved robust in the current climate of curtailed government expenditure and we do not expect to see any deterioration in this area.”

Dr Lynch concluded: “Given the continuation in the improvement of the macro environment, we took advantage of opportunities to improve the brand reach of the company by entering into new marketing arrangements. The robust demand backdrop and solid execution led to record revenues and EPS in the second quarter and first half of 2010, with strong cash generation. As in previous years, we expect to see the usual seasonality and unpredictability of the split of revenues between Q3 and Q4.

“Overall, we face the rest of the year with a strong balance sheet, and in light of the continuing macro recovery, we are confident in our ability to continue to deliver strong growth for the full year,” Lynch said.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years