Business Weekly - Cambridge, UK

Autonomy, which is predicting record results above analysts’ top predictions for the second quarter, has reported a slew of top flight contract wins this quarter, including a multi-million dollar deal with the US Government.

The Cambridge company, which has over recent months seen its market cap move into the realms of multi-billion dollars, has issued 12.7m shares – at a value of £93.35m – along with a term loan and a portion of its cash reserves to fund the acquisition.

Autonomy’s cash balances will remain at £37m following the acquisition, boosted by a book built placing in April, which was predicted by BW to make up part of an impending purchase.

Dr Michael Lynch, CEO of the augmented group said: “The combination of Autonomy and ZANTAZ, market leaders in enterprise search and content archival respectively, expands the addressable market, distribution and reach for Autonomy’s highly successful Aungate IDOL-based products.”

The firm said that it expects the newest addition to the Autonomy empire, which supplies nine of the global top 10 law firms with its data search and enterprise software, to provide £25m cost synergies and become earnings accretive in the first six months.

President and CEO of ZANTAZ, Steve King, who was named Ernst & Young Entrepreneur of the Year in 2006, will remain as CEO of the newly created division.

Commenting on the deal, King said: “Together with Autonomy, we will deliver an unprecedented opportunity for customers to gain competitive advantage and streamline the management and control of these key business processes, eliminating multi-vendor solutions and redundant resources, and significantly reducing cost and risk.”

Multiple top-flight contracts this quarter, including with the US DoD and the UK intelligence services, have boosted results above consensus estimates for Autonomy this quarter.

Dr Lynch believes this is indicative of the strength of Autonomy’s product. “These exceptional expected results show very strong organic growth. Recent trading has been further testament to the central importance of unstructured information in the next generation of the IT market,” Dr Lynch said.

ZANTAZ’ solutions enable organisations to capture, preserve and access unstructured digital information – which includes email, IM, files, scanned documents, SharePoint and other electronic records – and organises, formats, processes, and indexes the raw data so that it can be effectively used for litigation.

Steve King added: “Companies are rapidly recognising the importance of being able to proactively retain, classify and quickly extract meaningful evidence from terabytes of email, documents, spreadsheets, audio, video and other unstructured data for compliance and litigation purposes.”

Research predicts the legal discovery and litigation support infrastructure market, which reached £1.7bn in 2006, will double to almost £3.5bn in 2010.