Software giant Autonomy appears to have silenced its critics with these robust full-year figures. The fourth quarter of 2009 allowed the group to tackle many of the concerns raised by analysts following the release of its in October, by returning key metrics to more normal levels.
To begin with, gross margins ended the year at 89 per cent, after falling to 86 per cent in the third quarter following marketing spend on Autonomy's new database product - Structured Probability Engine (SPE). Day sales outstanding (DSO) - which measures the average number of days that it takes to collect revenues - have contracted to 88 days, after rising to 97 days in September. Autonomy believes normal DSO levels stand between 85 and 90 days, however, DSO rates were still lower at the end of 2008, at 84 days. Cash collection has also been exceptionally strong in the fourth quarter, at $216m (£135m) generated - this compares with cash collection of $121m in the previous year's corresponding quarter and $161m in the second quarter of 2009.
However, the calculation of organic growth may prove to be a difficult issue. Autonomy says that its acquisitions are integrated immediately and, as such, calculations of organic growth "may include qualitative estimates". So, while the group announced full-year organic sales growth of 16 per cent, analyst Ian Spence of IS Research points out that this excludes $66m of discontinued revenues from the acquisition of Interwoven in 2009. So, on a reported basis, he calculates that organic revenue growth reached just 8 per cent for the year.
But, putting such issues aside, management is looking forward to 2010 - regardless of the environment. "At the very end of the fourth quarter of 2009, we began to see some indicators of an initial improvement on the macro environment, which gives us confidence in the outlook for 2010, and accordingly we are adjusting our business plan," says chief executive Mike Lynch.
Clear consensus remains hard to find among analysts on Autnomy's prospects, but UBS Investment Research is bullish and expects pre-tax profits of $387m for 2010, and EPS of 135¢ ($266m and 97¢ in 2009).
AUTONOMY CORPORATION (AU.) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,586p | MARKET VALUE: | £3.8bn | |
| TOUCH: | 1585-1587p | 12-MONTH HIGH: | 1,687p | LOW: 1,102p |
| DIVIDEND YIELD: | nil | PE RATIO: | 31 | |
| NET ASSET VALUE: | 707¢* | NET CASH: | $45.3m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2005 | 96.0 | 12.6 | 7.00 | nil |
| 2006 | 251 | 56.3 | 21.0 | nil |
| 2007 | 343 | 91.4 | 21.0 | nil |
| 2008 | 503 | 186 | 61.0 | nil |
| 2009 | 740 | 266 | 81.0 | nil |
| % change | +47 | +43 | +33 | - |
*Includes intangible assets of $1.69bn, or 701¢ a share £1 = $1.6 | ||||
