Autonomy Overview DRAFT Preliminary | Subject to Further Review and Evaluation January 2011
Autonomy Overview Summary Financial Performance ($MM, except per share amounts) Dual Headquarters San Francisco, CA Fiscal Year Ended December 31, Cambridge, U.K. 2008A 2009A 2010E 2011E 2012E Revenue $503 $740 $866 $963 $1,079 Founding Founded in June 1996 by world-leading researchers Annual Growth 47% 47% 17% 11% 12% from University of Cambridge Gross Profit 458 652 764 856 969 Gross Margin 91% 88% 88% 89% 90% IPO July 1998 at a split-adjusted price of $1.23 (approx. £0.70) EBITDA 226 360 426 505 585 EBITDA Margin 45% 49% 49% 52% 54% Employees 1,800 (10% Administrative, 60% Technical, 30% Sales and Marketing) Free Cash Flow 121 191 281 322 487 Free Cash Flow Margin 24% 26% 32% 33% 45% Net Income 148 233 289 343 399 Customers/OEMs 20,000+ Customers, 400+ OEMs with over 500 product licenses Net Income Margin 29% 31% 33% 36% 37% Diluted EPS 0.68 0.97 1.09 1.27 1.48 Geographic Mix 70% Americas, 30% Rest of World Annual Growth 81% 43% 12% 17% 16% Key Verticals Education, Energy & Utilities, Financial Services, Government, Source: Projections based on Bank of America Merrill Lynch research as of October 19, 2010. Note: Free Cash Flow defined as Operating Cash Flow less Cap Ex and Investment in Product Development. Healthcare, Investigative, Legal, Manufacturing, Professional Gross Profit adjusted for amortization of acq related intangibles. Services/Consulting, Retail & Consumer, Technology, Telecom EBITDA adjusted for amortization of acq related intangibles, SBC, foreign exchange, and non-recurring items. Sales Channel Primarily indirect through 400 Value Added Resellers such as Trading Overview Accenture, IBM Global Services, Cap Gemini, HP and Wipro ($MM, except per share amounts) Product Overview Software infrastructure solutions that form an understanding of content, allowing for powerful meaning-based data processing Share Price £14.78 / $23.66 Fully-Diluted Equity Value (1) $5,811 Intelligent Data Operating Layer (IDOL) Server – collects Plus: Debt (1) 945 indexed data, enriching it with conceptual and contextual Less: Cash (1) 1,028 Fully-Diluted Enterprise Value (1) $5,728 understanding Core infrastructure of Autonomy’s solutions CY10E Statistic (2) Revenue $866 6.6x Power solutions – search and management built around IDOL EBITDA 426 13.4 Markets include Search, BPM, and OEMs Earnings per Share 1.09 21.7 CY11E Protect solutions – regulatory and compliance platform Revenue $963 5.9x Markets include eDiscovery, Archiving & Records, Content EBITDA 505 11.3 management, Compliance Earnings per Share 1.27 18.6 Note: Current market prices as of January 24, 2011, converted from Promote solutions – marketing and customer interaction GBP to USD at a constant spot exchange rate of 1.60. Markets include Web Content Management, eBusiness, (1) Net Debt based on Autonomy Form 6-K for the period ended September 30, 2010. Marketing Optimization, Rich Media Management, Contact Includes £500 ($800) convertible debt with strike price of £20.63 ($33.03). Center (2) Projections based on Bank of America Merrill Lynch research as of October 19, 2010. Source: Company filings. 2
Key Financial Metrics Historical Revenues Organic IDOL Revenue Growth YoY $MM Autonomy estimates organic IDOL growth by 800 $740 40% comparing prior period reported results with current period results (less any contribution from acquisitions and excluding services) 600 30% $503 $343 400 20% $251 200 10% $96 0 0% 2005 2006 2007 2008 2009 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2007 2008 2009 2010 Historical Margins Attractive Revenue Mix (in $MM, LTM) Gross EBITDA Services, $41 Margins Margins 94% 91% 91% 5% 100% 70% IDOL 89% 88% Deferred Product, $249 60% Revenue, 80% 49% 29% $250 45% 50% 29% 60% 34% 40% 29% 30% 40% 15% 20% 22% 13% OEM 20% 2% 10% IDOL Cloud, Ongoing, $115 OEM Dev, $184 0% 0% $11 2005 2006 2007 2008 2009 Source: Company filings. 3 Note: OEM Ongoing refers to sales of OEMs’ products. OEM Dev refers to a non-refundable, upfront development license fee.
Data Management Market Dynamics The secular migration towards unstructured data has created a large and meaningful addressable opportunity in managing, regulating and monetizing the use of information Current RDBMS solutions only address Structured Data Management Unstructured Data Management ~20% of the total data management market • 15% of total data (1) • 85% of total data (1) • Size: $18bn Unstructured data is expected to grow twice • Size: $20bn (email, video, voice, etc) • Traditional structured data CAGR of as fast as structured data • Unstructured data CAGR of 63.7% 32.3% from 2006 – 2010 (IDC) from 2006 – 2010 (IDC) Power : Manage and Search Protect: Legal and Compliance Promote : Marketing (~40% of 2009 Revenue) (~40% of 2009 Revenue) (~20% of 2009 Revenue) While enterprises only create 20% of all data, Data needing protection in 2020 is the U.S. behaviorally targeted online they need to manage transmission, storage, size of the entire digital universe in 2018 advertising spending (2) security and compliance for more than 85% of it EB (Exabytes) $MM 18,000 $5,000 User generated content Enterprise touch content $4,400 16,000 ~900 EB (Exabytes) ~960 EB $4,000 14,000 Data Needing Protection 12,000 Data Actually Protected $2,700 $3,000 10,000 Overlap Enterprise 8,000 ~600 generated $1,700 $2,000 EB content 6,000 $1,100 ~240 EB 4,000 $525 $775 $1,000 2,000 0 $0 2010 2012 2014 2016 2018 2020 2010: ~1,200 EB 2007 2008 2009 2010 2011 2012 Source: Company filings, IDC, Industry research. 4 (1) Bank of America Merrill Lynch estimates. (2) Source: eMarketer. Refers to advertising displayed to a select audience whose interest or intentions are revealed by website or ISP tracking data, audience segmentation and/or predictive analysis; excludes ads targeted using adware.
Key Fundamental Differentiators Autonomy’s IDOL Structured Probabilistic Engine (SPE) can be leveraged across verticals, functions and connectors Power: Manage and Search Protect: Legal and Compliance Promote: Marketing • Proliferation of unstructured • Proliferation and increasing • Rich media and content explosion information in enterprise IT complexity of data regulations • Shift from cost per thousand impressions Drivers • Secular migration towards • Reputational risk and tougher (CPM) to cost per action (CPA) automation versus adding headcount to sanctions for breaches advertising model reduce operating expenditures • Need to demonstrate ROI • Real-time Policy Management • Multichannel Customer Mgmt • Enterprise Search • Early Case Assessment • Social Media Analysis • Business Process Management • E-mail and Audio Archiving • Rich Media Management Applications • Business Intelligence • Advanced eDiscovery • eCommerce Solutions • Information Access • Retention and Disposition • Web Content Optimization • ~100 customers standardized on IDOL • Early signs of second phase adoption • Establishing pipes in core IT • Growth constant through recession and • Contribution geared to a recovery Growth platforms builds defensibility upturn • 15-25% growth • 10-15% growth (of which OEMs • 15-20% growth growing at 20% plus YoY) • Market leading solution • Produces tangible results • IDOL solution universally recognized • Largest, most visible eDiscovery cases • Delta Air Lines sales: +$30MM Commercial • OEM reaches 95% of customers in • 87% of the Fortune 100 • LexisNexis e-mail clickthroughs: +103% market (~5% product penetration • 10 of the top 10 global banks • Amnesty Int’l donation Leadership suggests significant growth opportunity) • 10 of the top 10 law firms clickthroughs:+157% • Major government agencies • Lenovo orders: +400 per week 5
IDOL Software Business Model Gross margins over 90%, operating margins over 50%, 30% of revenue deferred Business Delivery Model Illustrative Customer Over Time $MM • License (~$850k ASP) Once a decision has been taken to standardize, some customers have made upwards of 40 repeat purchases • Support & Maintenance (~15% p.a.) $60 Standard – in Q3’10 > 65% sales were repeat • Typical sale 4 connectors, 4 functions Product • 65% recurring revenue Rich Media Management $50 $2 • 400+ OEMs (~5 year deals) • Royalty-based ~3% (no deferred revenue, 100% gross margin) Policy Management $5 IDOL OEMs 10-14 signed per quarter – $2 35% year-on-year revenue growth – $2 $40 Website $5 • Paid monthly and typically 3-year contracts • Collected in arrears (no deferred revenue) Call Center IDOL Cloud • The world’s largest private legally compliant cloud $30 at over 17 Petabytes of data $15 Enterprise Search $51 • Mixture of traditional license and hosted revenues • Timing of revenues varies per contract $20 Hybrid Model • Some deferred revenues Legal Hold • New model focused on quick time to value, $10 $20 eDiscovery high return Appliance Archiving (Arcpliance) – Email (DSmail) – eDiscovery – $0 6
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