British software group Autonomy Corporation has found a silver lining in the economic gloom as companies use its products to prepare for litigation or investigation by regulators.

The group announced it had beaten market expectations for third-quarter revenue and pretax profit, reporting adjusted pretax profit of $53.7 million, against $24.9 million for the same period a year ago, on revenue 42 per cent ahead at $127.1 million.

Autonomy is the market leader in enterprise search and discovery software. Its core technology, called IDOL, searches and manages unstructured data, often in the form of e-mails, phone records or video.

Companies in the US have been purchasing the software to handle new regulations enforcing the swift discovery of information in lawsuits.

Autonomy can count Merrill Lynch, KPMG, Vodafone, Linklaters, Canon and AstraZeneca among its new customers. The company also gained repeat licences for governments, defence and intelligence agencies in the US and in Europe.

Chief Executive Mike Lynch told The Times that the fall-out from the credit crunch had seen a steep rise in litigation and Autonomy was well-placed to take advantage of the growing market.

“Business is strong, driven by regulatory requirements or litigation and investigation in the fall-out from the credit crisis.”

Autonomy was being used by regulators and by those under investigation, he said. "We play both sides."

The group signed three “mega deals” with banks earlier this year, which gave it a large backlog and some flexibility in recognising revenue.

Sales to original equipment manufacturers, such as Xerox and HP, were still growing at 50 per cent, Dr Lynch said.

He dampened expectations of up to 60 per cent growth next year because of the economic slowdown. “We are still expecting 50 per cent year-on-year,” he said. “The minor adjustment will have a 2 per cent effect on revenue.”

Shares in Autonomy, which rejoined the FTSE 100 index last month after seven years, rose sharply but fell back in later trading.

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