Transcription

Autonomy OverviewDRAFTPreliminary Subject to Further Review and EvaluationJanuary 2011

Autonomy OverviewSummaryDual HeadquartersSan Francisco, CACambridge, U.K.FoundingFounded in June 1996 by world-leading researchersfrom University of CambridgeIPOJuly 1998 at a split-adjusted price of 1.23 (approx. 0.70)Employees1,800 (10% Administrative, 60% Technical, 30% Sales and Marketing)Customers/OEMs20,000 Customers, 400 OEMs with over 500 product licensesGeographic Mix70% Americas, 30% Rest of WorldKey VerticalsEducation, Energy & Utilities, Financial Services, Government,Healthcare, Investigative, Legal, Manufacturing, ProfessionalServices/Consulting, Retail & Consumer, Technology, TelecomSales ChannelPrimarily indirect through 400 Value Added Resellers such asAccenture, IBM Global Services, Cap Gemini, HP and WiproProduct OverviewSoftware infrastructure solutions that form an understanding ofcontent, allowing for powerful meaning-based data processingIntelligent Data Operating Layer (IDOL) Server – collectsindexed data, enriching it with conceptual and contextualunderstanding Core infrastructure of Autonomy’s solutions2Financial Performance( MM, except per share amounts)Fiscal Year Ended December 31,RevenueAnnual GrowthGross ProfitGross MarginEBITDAEBITDA MarginFree Cash FlowFree Cash Flow MarginNet IncomeNet Income MarginDiluted EPSAnnual Growth2008A2009A2010E2011E2012E 50347%45891%22645%12124%14829%0.6881% 74047%65288%36049%19126%23331%0.9743% 86617%76488%42649%28132%28933%1.0912% 96311%85689%50552%32233%34336%1.2717% 1,07912%96990%58554%48745%39937%1.4816%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.Gross Profit adjusted for amortization of acq related intangibles.EBITDA adjusted for amortization of acq related intangibles, SBC, foreign exchange, and non-recurring items.Trading Overview( MM, except per share amounts)Share PriceFully-Diluted Equity Value (1)Plus: Debt (1)Less: Cash (1)Fully-Diluted Enterprise Value (1) 14.78 / 23.66 5,8119451,028 5,728Power solutions – search and management built around IDOL Markets include Search, BPM, and OEMsCY10ERevenueEBITDAEarnings per ShareStatistic (2) 8664261.096.6x13.421.7Protect solutions – regulatory and compliance platform Markets include eDiscovery, Archiving & Records, Contentmanagement, ComplianceCY11ERevenueEBITDAEarnings per Share 9635051.275.9x11.318.6Promote solutions – marketing and customer interaction Markets include Web Content Management, eBusiness,Marketing Optimization, Rich Media Management, ContactCenterNote: Current market prices as of January 24, 2011, converted fromGBP to USD at a constant spot exchange rate of 1.60.(1) Net Debt based on Autonomy Form 6-K for the period ended September 30, 2010.Includes 500 ( 800) convertible debt with strike price of 20.63 ( 33.03).(2) Projections based on Bank of America Merrill Lynch research as of October 19, 2010.Source: Company filings.

Key Financial MetricsHistorical RevenuesOrganic IDOL Revenue Growth YoY MM800 74060030% 503 343400Autonomy estimates organic IDOL growth bycomparing prior period reported results withcurrent period results (less any contributionfrom acquisitions and excluding services)40%20% 25120010% 9600%20052006200720082009Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q32007200820092010Historical MarginsAttractive Revenue Mix (in MM, ct, 24929%29%30%15%2006DeferredRevenue, 25040%20%2005Services, 41200720082009Source: Company filings.Note: OEM Ongoing refers to sales of OEMs’ products.OEM Dev refers to a non-refundable, upfront development license fee.13%OEM2%Ongoing,OEM Dev, 115 1122%IDOL Cloud, 184

Data Management Market DynamicsThe secular migration towards unstructured data has created a large and meaningful addressable opportunity inmanaging, regulating and monetizing the use of informationStructured Data Management 15% of total data(1) Size: 18bn Traditional structured data CAGR of32.3% from 2006 – 2010 (IDC)Current RDBMS solutions only address 20% of the total data management marketUnstructured Data Management 85% of total data(1) Size: 20bn (email, video, voice, etc) Unstructured data CAGR of 63.7%from 2006 – 2010 (IDC)Unstructured data is expected to grow twiceas fast as structured dataPower: Manage and SearchProtect: Legal and CompliancePromote: 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 thethey need to manage transmission, storage,size of the entire digital universe in 2018security and compliance for more than 85% of it EB (Exabytes)User generated content 900 EB (Exabytes)Enterprise touch content 960 EB 4,000Data Needing ProtectionData Actually Protected10,0008,000Source:(1)(2) 1,700 2,0006,0004,000 1,00004 2,700 3,0002,0002010: 1,200 EB 4,40016,00012,000Enterprisegeneratedcontent 240 EB MM 5,00018,00014,000Overlap 600EBU.S. behaviorally targeted onlineadvertising spending(2) 525 775 1,100 0201020122014201620182020200720082009Company filings, IDC, Industry research.Bank of America Merrill Lynch estimates.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 adstargeted using adware.201020112012

Key Fundamental DifferentiatorsAutonomy’s IDOL Structured Probabilistic Engine (SPE) can be leveraged across verticals, functions and connectorsPower: Manage and SearchDrivers Proliferation of unstructuredinformation in enterprise IT Secular migration towardsautomation versus adding headcount toreduce operating expendituresApplications Growth 100 customers standardized on IDOL Establishing pipes in core ITplatforms builds defensibility 10-15% growth (of which OEMsgrowing at 20% plus YoY)CommercialLeadership IDOL solution universally recognized OEM reaches 95% of customers inmarket ( 5% product penetrationsuggests significant growth opportunity)5Enterprise SearchBusiness Process ManagementBusiness IntelligenceInformation AccessProtect: Legal and CompliancePromote: Marketing Proliferation and increasingcomplexity of data regulations Reputational risk and toughersanctions for breaches Rich media and content explosion Shift from cost per thousand impressions(CPM) to cost per action (CPA)advertising model Need to demonstrate ROI Real-time Policy ManagementEarly Case AssessmentE-mail and Audio ArchivingAdvanced eDiscoveryRetention and Disposition Early signs of second phase adoption Growth constant through recession andupturn 15-20% growth Market leading solutionLargest, most visible eDiscovery cases87% of the Fortune 10010 of the top 10 global banks10 of the top 10 law firmsMajor government agenciesMultichannel Customer MgmtSocial Media AnalysisRich Media ManagementeCommerce SolutionsWeb Content Optimization Contribution geared to a recovery 15-25% growth Produces tangible resultsDelta Air Lines sales: 30MMLexisNexis e-mail clickthroughs: 103%Amnesty Int’l donationclickthroughs: 157% Lenovo orders: 400 per week

IDOL Software Business ModelGross margins over 90%, operating margins over 50%, 30% of revenue deferredBusiness Delivery ModelStandardProductIDOL OEMs License ( 850k ASP)Support & Maintenance ( 15% p.a.)Typical sale 4 connectors, 4 functions65% recurring revenue 400 OEMs ( 5 year deals) Royalty-based 3% (no deferred revenue, 100% gross margin)–10-14 signed per quarter–35% year-on-year revenue growthIllustrative Customer Over Time MMOnce a decision has been taken to standardize, somecustomers have made upwards of 40 repeat purchases– in Q3’10 65% sales were repeat 60Rich Media Management 50 2Policy Management 2 2 40IDOL Cloud Paid monthly and typically 3-year contracts Collected in arrears (no deferred revenue) The world’s largest private legally compliant cloudat over 17 Petabytes of data 5Website 5Call Center 30 15Enterprise Search 51Hybrid ModelAppliance6 Mixture of traditional license and hosted revenues Timing of revenues varies per contract Some deferred revenues New model focused on quick time to value,high return–Archiving (Arcpliance)–Email (DSmail)–eDiscovery 20 10Legal Hold 20eDiscovery 0

Competitive PositioningMessage Archiving Software (Forrester Wave)AUTONOMY LEADS THE DATA MANAGEMENT INDUSTRY WITHMEANING BASED COMPUTINGNetwork EffectsTechnology and vendor agnostic nature of IDOL leads toincreasing adoption by OEM vendorsTechnologyOver 135m in R&D spend in last 12 months; 170 patents;100% of technology is ownedStandardizationConnects to over 400 content repositories and over 1,000 fileformats (one new connection within IDOL can replace 9,000 newconnections between entities)Installed BaseOver 20,000 customers and 400 partnersAcquisitionsSuccessful track record in integrating and expanding IDOLtechnology across customers and use casesStrength of Current OfferingData Management LeaderSymantecAutonomyCAOpen TextEMCHPIBMQuestStrength of StrategyEnterprise Search (Forrester Wave)Web Content Management (Gartner Magic VivisimoOracleIBMGoogleMicrosoftAbility to ExecuteStrength of Current OfferingFAST, a Microsoft subsidiaryMicrosoftIBMAtex7Source: Gartner, Forrester reDay h of StrategyOpen TextClickabilityCompleteness of Vision

400 Partners and 20,000 CustomersAcross Multiple iaConsumer/MfgFinanceLegal/Govt

AcquisitionsAcquisition Strategy Since 2003, Autonomy has successfully acquired 11 businesses with 600mm in cumulative LTM revenue Autonomy’s strategy has been to focus on specific markets in which IDOL can be substituted as the foundation for existing technologies andleveraged across customer environments This has provided Autonomy rapid cost savings and the addition of installed base and channel has created significant cross-sell / up-sellopportunities associated with additional functionalityM&A Transaction History( MM)Fully-DilutedAnncDateTransaction LTMNTMLTMNTMLTMNTMPremTargetDescriptionJun-10CA's Governance UnitInformation governance software 19 19-------Feb-09MicroLinkERP systems integration 55 55-------Jan-09InterwovenEnterprise content management 803 618 260 2922.4x2.1x21.9x19.5xOct-07MeridioDocuments & record management 41 41 27-1.5x---Jul-07ZANTAZElectronic archiving and e-discovery 375 375 100-3.8x----Nov-05VerityData & content indexing and search 503 311 144 1502.2x2.1x45.0x32.9x30%Apr-05etalkCall center monitoring 70 70 37-1.9x----Jul-03VirageAutomated audio and video surveillance 25 18 1x33.4x26.2x34%Autonomy9Sources: Company filings, press releases, 451 Group and Wall Street Research.37%-

Trading Statistics of Selected CompaniesRevenue(CY11E, MM)Enterprise Value( MM)App. Infrastructure / Data Management Systems5-YearRevenue CAGREBITDA Margin(CY11E, MM)SaaS 30,000 17,495 20,000 16,977 11,359 10,000 0VMW 5,000 4,000 3,000 2,000 1,000 0 4,163ADBE100%CRM 7,940 7,317 7,251 5,728 4,502 4,312 4,001 2,648 2,454 2,180 1,886 1,743TDCAutonomyINFASoftware AGTIBXOTEXCNQRSFSFQLIKPRGS 1,014 995 963 840 740 564 369 268 HT 2,109 2,093 2,058 2,023 3,412VMWBMCTDCCTXSCRM 1,595Software AGOTEXApp. Infra. Median 17%Infra. Software Median 15%SaaS Median 17%15%14%11%6%6%5%Software App. Infra. Median 28%Infra. Software Median 33%SaaS Median 19%19%18%15%0%5%Autonomy12.0xEV / Revenue(CY11E)Infrastructure Software 37,845 .7xOTEX6.1x6.0xRHT5.9xCNQR5.5xSoftware IKCNQRINFAAutonomyCTXSTIBXSFSFApp. Infra. Median 3.5xInfra. Software Median 5.5xSaaS Median 8.6x4.1x3.8x3.5x3.1x2.7x2.6xADBEBMCTDCPRGSSoftware AGOTEX3.0x0.0xQLIKCapital IQ, company filings, press releases and Wall Street research. Excludes stock-based compensation. Autonomy figures based on Bank of America Merrill Lynch research as of October 19, 2010.Current prices as of January 24, 2011. 5-Year CAGRs based on CY2005 to CY2010.Revenue growth rate for Qlik Technologies are based on CY2008 to CY2009.Negative earnings noted as NM.

Operating Statistics of Selected Companies5-YearEPS CAGRApp. Infrastructure / Data Management Systems50%40%30%20%10%0%44%VMWLong TermEPS tware BMCSoftware AGTDCCTXSADBE47.1xRHT2.2x2.0xApp. Infra. Median 22.5xInfra. Software Median 28.5xSaaS Median tware AGOTEX1.5xApp. Infra. Median 1.1xInfra. Software Median 2.2xSaaS Median CSoftware OTEXApp. Infra. Median 13.2xInfra. Software Median 17.2xSaaS Median IKApp. Infra. Median 16%Infra. Software Median 15%SaaS Median 28%15%100.0xP/E(CY11E)App. Infra. Median 13%Infra. Software Median 11%SaaS Median 29%NM0%P/E/G(CY11E)SaaS38%27%60%EV / EBITDA(CY11E)38%Infrastructure AutonomyADBEPRGSSoftware AGOTEXBMCCapital IQ, company filings, press releases and Wall Street research. Excludes stock-based compensation. Autonomy figures based on Bank of America Merrill Lynch research as of October 19, 2010.Current prices as of January 24, 2011. 5-Year CAGRs based on CY2005 to CY2010.EPS growth rate for Qlik Technologies are based on CY2008 to CY2009.Negative earnings noted as NM.

Selected Management and DirectorsBoard of DirectorsManagementJoined AURolePrevious Position / BoardsEducationDr. Mike Lynch, OBE(1)1996Founder,CEOFounder, Neurodynamics; Director, Autonomy;Non-executive Director, BBC, Blinkx, Featurespace,NESTA, Foundation of Science and TechnologyPh.D. in Mathematical Computing,M.A. in Electrical and Information Sciences,University of CambridgeSushovan Hussain(1)2001CFOCorporate Development, LASMO;Ernst & YoungB.A. in Economics, University of Cambridge;Chartered AccountantStouffer Egan2001CEO – U.S.VP of Corp Development, LeadingSide, DatawareB.A. in Economics, Trinity CollegeDr. Peter Menell1998ChiefResearchOfficerCTO, Autonomy;Neuro-Physiology ResearchD.Phil., Oxford University;B.A. (Hons) and M.Sc., York UniversityAndrew Kanter2000COOVP, International Operations and Legal Affairs,Autonomy;Brobeck Hale and Dorr; Shearman & SterlingJ.D., USC Law Center; B.A., Johns Hopkins;Kansai Uni. of Foreign Studies, Osaka, JapanEloy Avila2004CTOU.S. CTO, Autonomy;Research in ultra-efficient electric vehiclesB.S. in Electrical Engineering, Stanford UniversityIan Black2000Head ofGlobalOperationsDirector, Corporate Communications, Autonomy;MD, Aungate; Head of Corporate Communication,BAE SystemsPhysiology, Henley Management College;Business Administration, Filton CollegeRobert Webb2009NonExecutiveChairmanGC, British Airways; Non-Exec Director BBC,London Stock Exchange and Argent GroupLLB., Exeter UniversityRichard Gaunt1996Founder,BoardMemberTechnical Director, Autonomy;Technical Director, NeurodynamicsBSc. and MSc. in Electronic Engineering,University of NatalJohn McMonigall1998BoardDirectorApax Partners, British Telecom;Board Director, Dialog Semiconductor-Jonathan Bloomer2010BoardDirectorPartner, Cerberus; Ex-CEO, Prudential; ArthurAnderson; Chairman of Lucida, Scottish Re;Director, Hargreaves LansdownBSc. Physics, Imperial CollegeDr. Frank Kelly2010BoardDirectorProfessor, University of Cambridge;Chief Scientific Advisor, UK Dept of TransportPh.D. University of Cambridge;BSc. Durham University12Source: Company Website.(1)Also serves on the Board of Directors.

Independent Advisors to the BoardIndependent AdvisorsJoined AURolePrevious Position / BoardsEducationBarry Ariko2000IndependentAdvisorCEO and President, Mirapoint; Chairman, CEO andPresident, Extricity; SVP, AOL; EVP, COO,Netscape CommunicationsB.S. in Management, Golden Gate UniversityRichard Perle2000IndependentAdvisorDirector, Hollinger International; Resident Fellow,American Enterprise Institute for Public PolicyResearch; United States Assistant Secretary ofDefense for International Security PolicyM.A. in Politics, Princeton University;LSE with Honors Examinations;B.A. in International Relations, University ofSouthern CaliforniaAnthony Bettencourt2005IndependentAdvisorChairman, Blinkx; Advisory Board of Santa ClaraUniversity's Center for Science, Technology andSociety; CEO, VerityB.A. in English, Santa Clara UniversityDr. Nick Kingsbury2005IndependentAdvisorUniversity Lecturer in Signal Processing, Universityof Cambridge; Director of Studies in InformationEngineering, Trinity College, Cambridge; GroupLeader, Marconi Space and Defense SystemsHonours Degree and Ph.D. in ElectricalEngineering, University of CambridgeProfessor William J.Fitzgerald-IndependentAdvisorProfessor of Applied Statistics and Signal Processingin the Department of Engineering, University ofCambridgeB.Sc., MSc., and Ph.D. in Physics, University ofBirminghamProfessor Peter Rayner-IndependentAdvisorEmeritus Professor, University of Cambridge;Emeritus Fellow of Christ's College, University ofCambridge, Head of the Signal Processing andCommunications Research Group at University ofCambridgePh. D., Aston University;M.A., University of Cambridge13Source: Company Website.(1)Also serves on the Board of Directors.

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eDiscovery Legal Hold . (Gartner Magic Quadrant) Open Text Strength of Strategy Autonomy IBM CA g HP EMC Quest Symantec Source: Gartner, Forrester Research. AUTONOMY LEADS THE DATA MANAGEMENT INDUSTRY WITH MEANING BASED COMPUTING Network Effec