Following the market trading of October 6th, there has been some concern about the fate of Autonomy (news, site) when its shares plummeted by 16%, raising speculation that it would fall prey to one of the many predators out on the market at this time.

However, with the release of its Q3 figures, which show a rise of 10% in revenues, compared to the same quarter last year, to US$ 211 million and confirmation that a major acquisition will be announced this fall, the future looks brighter than some analysts were predicting earlier this month.

Autonomy In Q3

What most were looking for in the Q3 results released earlier this week was an explanation as to why Autonomy downgraded its sales-growth forecast for the year and what had become of the acquisition that CEO Mike Lynch had been talking about in Q1.

Following the release, anyone who had had a dose of the jitters after October 6th, could put their concerns aside and look towards 2011, which Lynch says will be considerably better after Autonomy closed a number of deals that have been rattling around their books for some time, as well as a general market rebound.

So why the downgrading of sales forecasts earlier this month? The reason was simple really. Companies that had agreed to purchases in recent months had held back on signing-off on the deals as opinions continued to bounce like a yo-yo as to where the global economy was headed.

It is unlikely that Autonomy is the only company that suffered from similar experiences over the past six months, but Autonomy publicly announced it in their forecasts, causing the October fall-off in share prices. Lynch, in a statement accompanying the Q3 figures made it clear that demand for its products was still very strong.

We have seen no change to the fundamental demand for the business and note that recently published industry analyst reports in our markets are predicting growth of 16% for the coming year as well as lauding Autonomy's leading position and market share gains in these markets,” he said.

Autonomy and IDOL

Since the beginning of the year, Autonomy has released a number of new features and improvements to its IDOL-based technologies, leaving it with something to shout about. Some of the highlights, which you might recall include:

There have also been other deals signed and sealed in this quarter which in turn has provided the company with a rise in its OEM deals from 9 to 12, with signings that include GE, Iron Mountain and Symantec.

The result has been a set of quite impressive results, placing Autonomy in Gartner’s 2010 Magic Quadrant for web content management and providing financial returns that has everyone involved in the stock markets on both sides of the Atlantic absolutely beaming.

Autonomy Figures

Apart from Q3 revenues of US$ 211 million, which represent the highest Q3 revenues in the company's history, Autonomy also showed a net profit for the third quarter of US$ 67.2 million, up from US$ 48.6 million in 2009.

It also managed to close-off a number of million dollar deals in the third quarter, which had been held over its head for some months, bringing the total number of deals with similar or greater amounts to 20.

More significantly, from a product perspective, IDOL-based business grew 19% during the first nine months of 2010 and 10% over Q3 in 2009, which, Autonomy says, had been an exceptionally strong quarter and which represents a growth of 30% in IDOL business since the beginning of the year.

Autonomy’s Next Acquisition

So the only other thing that needs to be answered is what happened to the promised acquisition that Michael Lynch confirmed was going to happen sometime this year? 

You may recall that Autonomy raised US$ 911m in February this year by the sale of convertible bonds which Lynch indicated that they would be using to buy something, probably in the US. Some analysts at the time were predicting that Autonomy might even be in the market for something as rich as US$ 2bn, which should really give it something quite tasty.

It seems that the deal is still on and that an announcement is expected this fall, which means very soon. What it is, even rumors can’t guess -- astoundingly, there have been no rumors about what Autonomy is doing here -- but Lynch told Bloomberg news service that it would be something out of the “standard Autonomy playbook” and similar to previous acquisitions.

What and when it will be announced is not known, but as soon as we know, you will too.