Enterprise software company Autonomy Corp. plc (AU.L, AUTNF.PK) reported Tuesday a higher profit in its third quarter, mainly driven by strong organic Intelligent Data Operating Layer, or IDOL, growth. Looking ahead, the company said it expects to continue to deliver good earnings per share growth in 2011, with upside to current market consensus.
Third-quarter net profit, on IFRS basis, was $44.83 million, compared to $36.77 million in the year-ago quarter. On a per share basis, earnings grew 21% to $0.18 from last year's $0.15.
On an adjusted basis, net profit grew to $67.23 million from $48.58 million in the prior year, and earnings per share climbed 25% to $0.25 from $0.20 last year.
Pre-tax profit for the quarter grew to $57.56 million from $48.64 million a year earlier.
The provider of infrastructure software reported that revenues for the three months ended September 30, 2010 rose 10% to $210.56 million from $191.61 million last year. The movements in foreign exchange rates reduced revenues by about $1.2 million.
At the time of its second-quarter results presentation, the company was projecting revenues of $206 million to $211 million for the third quarter.
Commenting on the results, Dr Mike Lynch, Group CEO of Autonomy said, "During the third quarter of 2010 we delivered revenues at the top end of the range discussed at Q2 2010, with profit before tax, gross margin, operating margin, average selling price, or ASP, and EPS all showing a material increase over the prior year, despite the traditional seasonal softness."
On a geographical basis, revenues from Americas increased to $141.45 million from $135.73 million last year, and revenues from rest of the world grew to $69.11 million from prior year's $55.87 million. During the third quarter, there were 20 deals over $1.0 million.
In the quarter, gross profit increased 14% year-over-year to $170.4 million, and adjusted gross profit went up 12% to $184.4 million. Adjusted gross margin for the quarter increased to 88% from 86% a year ago, due largely to changes in the sales mix.
Profit from operations for the third quarter climbed 33% from last year to $67.6 million, and adjusted profit was up 29% to $85.0 million. Operating margins, on an adjusted basis, grew to 40% from 34% last year, mainly on the operational gearing of the company.
The company noted that average selling price for meaning-based technologies was $831,000.
Autonomy pointed out that it witnessed unexpected volatility in customers' purchasing behaviour in the quarter, as their views on macroeconomic conditions oscillated with each inconclusive set of economic indicators. This was in addition to the usual third quarter seasonality and the usual issues around the holiday months.
Looking ahead, the company noted that it has not seen a softening of demand, which has continued to increase since the quarter end despite the unpredictability. "Given this update it may seem very conservative to have previously changed our outlook for Q4 2010, but we felt it was safer to allow leeway should volatility continue. This 'volatility versus demand' point may seem a subtle distinction, but it is important in understanding the macro environment effects," the company said.
Lynch also said, "Our new product launches and the ability of our IDOL OEM business to capture any macro improvement, we are confident in maintaining our view of the outlook for demand and expect to continue to deliver good EPS growth in 2011, with upside to current market consensus."
In early October, Autonomy had lowered its revenue outlook for the full year, saying it expects a reduction of 3% from current consensus. On this basis, the company projects full-year revenue growth of 17%, organic revenue growth of around 12% and year-on-year profit before tax growth of approximately 20%.
On the London Stock Exchange, AU.L is currently trading at 1,373.88 pence, down 45.12 pence or 3.18%, on a volume of 227 thousand shares.
AUTNF.PK closed Monday's regular trading session at $22.40, up $0.60 or 2.75%.
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