July 3 (Bloomberg) -- Autonomy Corp., which sells database search software, bought closely held e-mail archive company Zantaz Inc. for $375 million and said second-quarter revenue and pretax profit beat analysts' highest estimates. The stock had its biggest gain in 18 months.
Sales and pretax profit were ``significantly'' better than the average estimates of analysts and ``ahead of the top end'' of forecasts, Autonomy said today in a statement of its preliminary results. The company was predicted to have sales of $70.2 million, the average of four estimates compiled by Bloomberg.
Cambridge, England-based Autonomy, which won contracts with the U.S. Defense Department and Fidelity Investments in the quarter, is benefiting from demand for tools used in search, classification and analysis of text, video and audio databases. Autonomy plans to combine Zantaz's e-mail archive and analysis products with Autonomy's other search software.
``Today's announcement is positive,'' JPMorgan Cazenove analyst Daud Khan wrote in a research note. Khan, who rates the company ``in-line,'' estimates the company had $69.6 million in sales and pretax profit of $24.7 million.
Autonomy shares rose 65.5 percent, or 9 percent, to 793.5 pence at 10:28 a.m. in London. Earlier it climbed as much as 11 percent, the most since November 2005. The stock had risen 86 percent in the past 12 months before today.
Sales Growth
The second-quarter results extend the company's sales growth to 11 consecutive quarters.
Pretax profit in the quarter was forecast to be $23.4 million, the average of three estimates compiled by Bloomberg.
``A lot of this has to do with companies switching'' to Autonomy's database search software, Chief Executive Officer Michael Lynch, who owns 10 said in an interview. ``Autonomy has had a strong second quarter.''
Autonomy, in a separate statement, also said it will sell 12.7 million new shares to help fund the purchase of Pleasanton, California-based Zantaz.
Citigroup Inc. and UBS AG managed the sale.
Zantaz's customers include banks and nine of the top 10 global law firms. The acquisition of Zantaz, which will add to earnings in the first six months after the August close, will reduce costs by $25 million a year.
To contact the reporters on this story: Alex Armitage in London at aarmitage@bloomberg.net
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