Global CIO: How The World's Hottest Enterprise Software Company Defies The Downturn
In this first of a two-part series on Autonomy, find out how the company finds growth and drives change in the gloom.
Ah, the sweet promise of enterprise software in mid-2009: Oracle and SAP calling each other dog-eaters, cloud computing caught between vast potential and bottomless hype, Microsoft still unsure about what it wants to be when it grows up, SaaS's big success in narrow slices, the cascading acquisitions that hope to make BI mainstream, 22% maintenance fees, and recently perhaps the beginning of the end of software-only companies. Dave Duffield gets $75 million in venture capital and Larry Ellison says he'll keep taking market share from everyone and Marc Benioff says Oracle just doesn't understand cloud computing and SAP's Bill McDermott says Oracle is following a 20th century company strategy and Ballmer says he can't imagine why Oracle would buy a hardware company. That's about it for the big story lines in the world of heavyweight software companies, right?
So among such traditional favorites, what're the chances for an enterprise software company based in the United Kingdom and focused on meaning-based computing and meaning-based marketing? Would they have a chance if their if compliance and regulatory infrastructure and e-discovery applications could unlock growth driven by multivariant testing and unified views of customers? In today's stifling environment, will cash-strapped CIOs shell out some of their precious dollars to this relatively unknown company that has no ERP modules, avoids Highway 101 billboard spats, and diligently limits its professional services business to a trickle of its overall revenue?
If you think this is the stuff of fantasy, let me introduce you to the world's hottest enterprise software company, Autonomy, which under the leadership of CEO Mike Lynch is tying together a string of formerly B-list software technologies into an overarching business technology strategy that's as customer-centric as any CRM system but as technologically gritty as any middleware road map you can find. Lynch and Autonomy are weaving together a set of internally focused and highly advanced technologies and applications such as enterprise search, content management, indexing, compliance, and e-discovery with a new set of e-commerce tools from the recent Interwoven acquisition to give it a unique value proposition that CIOs from across a huge range of industries are lining up to buy.
I realize those are some sweeping statements, so let me quantify those claims. And bear in mind that these numbers come during a time when many tech companies are reporting lower revenue year on year, with some hoping to limit those declines to single digits:
Revenue was up 23% for the quarter ended March 31, and pretax profit was up 87%.
The company's market cap is more than $4 billion, with its stock at or near all-time highs.
More than 500 software companies have signed OEM licenses for Autonomy's technologies, and in the first quarter Autonomy's OEM revenue jumped 40% year on year. And Lynch said the pipeline is "looking stronger."
The average selling price for the quarter was $385,000 with "no pressure on margins," Lynch told analysts, while the government business is strong with a "significant" backlog.
Autonomy closed 11 deals for $1 million or more in the first quarter, with Lynch referring to "megadeals" in tobacco, pharmaceuticals, financial services, and insurance.
In the all-important cash-balance category, Autonomy initially projected it would finish the quarter with $75 million in cash, later revised that estimate upward to $100 million, and ended up reporting $132 million.
In the company's quarterly call with analysts, Lynch offered a long list of customer wins for the quarter, featuring purchases of a wide range of Autonomy products from an equally wide range of industries, including some massive global accounts: MetLife for compliance archiving, Toyota for compliance, BarclayCard for compliance archiving, Bank of Thailand for records management, Bank of America for an enterprise deal, Ikea and Starwood Hotels for Web site infrastructure, T-Mobile for contact center, JPMorgan Chase for compliance, Genentech for e-mail management, Telecom Italia for multiple apps, and many more.
So why have the stars aligned so propitiously for Lynch and Autonomy? How, during a time when CIOs are loath to spend on anything but absolute essentials, was Autonomy able to defy industry norms and grow significantly in the first quarter while also building a nice pipeline for later in the year?