UK web pioneer earns first profit

On a black day for internet companies following the collapse of high-profile online retailer Boo.com, one UK web firm was trumpeting the news that it is in the black for the first time.

Knowledge management specialist Autonomy, spun out of a company started on the back of a £2000 loan nine years ago, saw pre-tax profit reach $346,000 for the quarter ending 31 March, compared with a loss of $921,000 a year earlier.

Revenue jumped by 244 per cent to $11.7m with European revenue up from $2.4m in the previous quarter to $5.2m. US revenue rose from $990,000 to $6.3m. The company added many new blue-chip accounts including Tesco, General Motors and Royal & Sun Alliance.

Autonomy said it has also taken a majority stake in Cambridge-based Softsound, which develops speech recognition technology.

Mike Lynch, chief executive of Autonomy, said: "The first quarter of 2000 saw an exceptionally strong performance. We moved into profitability and saw excellent revenue growth across all markets. Our operations continue to expand globally, fuelled by OEM [original equipment manufacturers] and partnership agreements.

"We will continue to execute our strategy of leveraging our indirect distribution channels to drive forward our business into new markets and our technology into new areas."

The performance has impressed some analysts. Max Thowles-Reevs, of IT financial analyst firm Richard Holway, said: "Autonomy is a thoroughbred amongst internet donkeys.

"It has high barriers to entry, a strong competitive advantage, stellar gross margins and the potential for high free cash flow. It has an improving geographic footprint as well as an improving technological footprint, and the SoftSound acquisition should further develop the range. Its quarter-on-quarter revenue growth is strong and it is moving into profitability ahead of expectation."