Multinationals drive growth at Autonomy

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Autonomy, the specialist software business, reported 20 per cent plus revenue growth for the third successive quarter yesterday, confirming the growth in global technology spending.

However, Mike Lynch, the company's chief executive, warned that while Autonomy was seeing strong demand for its software, this was probably the result of essential modernisation spending by clients rather than a return to the free spending boom years of the 1990s.

"It does seem that large multinationals are back doing the things they need to get done. It is not looking like the old days. It is really very much about spending money on important operational things," Mr Lynch said.

The company reported revenues up from $11.9m to $16.3m in the three months to 31 March and underlying profit before tax of $2.7m, up from $1.3m. It generates half its revenue in the US and half in Europe, with bases in San Francisco and Cambridge.

Mr Lynch said Autonomy's operating profit margin had jumped from 1 per cent to 12 per cent as a result of quarterly revenues rising 36.8 per cent. This was because of the company's high operational gearing, said Mr Lynch. As a pure software provider, its fixed costs have not been bloated by employing consultants to provide customers with additional services. Additional revenues from increasing software sales have an immediate impact on profits as a result.

Autonomy supplies software to companies to handle and process so-called "unstructured data" such as e-mails, reports and letters. Most computer software systems bought by companies are used to process structured data, such as lines of figures, but cannot read or analyse less formally organised data.

About 80 per cent of all data, however, comes in unstructured forms, so companies are behind in developing ways of efficiently processing this data and responding to it, Autonomy says.

Mr Lynch said his company's software was now being applied by customers as the standard in its field. Its clients include Vodafone, the NHS and CNN.