Endava Announces Third Quarter Fiscal Year 2025 Results

Published: 2025-05-14 07:18:04 ET DAVA

Published on 05/14/2025 at 07:18

Q3 FY2025 11.7% Year on Year Revenue Increase to £194.8 million 12.4% Revenue Increase at Constant Currency Diluted EPS £0.18 compared to £(0.03) in the prior year comparative period Adjusted Diluted EPS £0.34 compared to £0.22 in the prior year comparative period

Endava plc (NYSE: DAVA) ("Endava" or the "Company"), the technology-driven business transformation group whose AI-native approach combines cutting edge technology with deep industry expertise, today announced results for the three months ended March 31, 2025, the third quarter of its 2025 fiscal year ("Q3 FY2025").

“The business environment continues to evolve rapidly and the quarter just ended has been challenging. Clients' desire to innovate remains strong; however, they are slow at signing larger contracts in the current uncertain macroeconomic environment. The opportunity pipeline continues to grow but the conversion into revenue is not happening as we would have expected. In this uncertain environment, we are focusing on what we can control to best position the business for the long term. Additionally, our board of directors has authorized the repurchase of up to $50 million of additional Endava shares, reflecting our confidence in our cash flow outlook and long-term strategy,” said John Cotterell, Endava's CEO.

THIRD QUARTER FISCAL YEAR 2025 FINANCIAL HIGHLIGHTS:

CASH FLOW:

* Definitions of the non-IFRS measures used by the Company and a reconciliation of such measures to the related IFRS financial measure can be found under the sections below titled “Non-IFRS Financial Information” and “Reconciliation of IFRS Financial Measures to Non-IFRS Financial Measures.”

OTHER METRICS FOR THE QUARTER ENDED MARCH 31, 2025:

OUTLOOK:

Fourth Quarter Fiscal Year 2025:

Endava expects revenue will be in the range of £186.0 million to £188.0 million, representing a constant currency revenue change of between (1.0)% and 0.0% on a year over year basis. Endava expects adjusted diluted EPS to be in the range of £0.22 to £0.24 per share.

Full Fiscal Year 2025:

Endava expects revenue will be in the range of £771.5 million to £773.5 million, representing a constant currency revenue increase of between 6.0% and 6.5% on a year over year basis. Endava expects adjusted diluted EPS to be in the range of £1.11 to £1.13 per share.

This above guidance for the fourth quarter and full fiscal year 2025 assumes the exchange rates on April 30, 2025 (when the exchange rate was 1 British Pound to 1.34 US Dollar and 1.18 Euro).

Endava is not able, at this time, to reconcile its expectations for the fourth quarter and full fiscal year 2025 for a rate of revenue growth or decline at constant currency or adjusted diluted EPS to their respective most directly comparable IFRS measures as a result of the uncertainty regarding, and the potential variability of, reconciling items such as share-based compensation expense, amortisation of acquired intangible assets, foreign currency exchange losses / (gains), net, and fair value movement of contingent consideration, as applicable. Accordingly, a reconciliation is not available without unreasonable effort, although it is important to note that these factors could be material to Endava's results computed in accordance with IFRS.

The guidance provided above is forward-looking in nature. Actual results may differ materially. See “Forward-Looking Statements” below.

SHARE REPURCHASE PROGRAM:

As of April 30, 2025, the Company had repurchased 1,975,906 American Depositary Shares ("ADS") for $39.7 million under its share repurchase program. As of April 30, 2025, the Company had $60.3 million remaining for repurchase under its share repurchase authorization. Additionally, the Board of Directors of Endava has approved an additional $50 million of share repurchases under the existing program.

CONFERENCE CALL DETAILS:

The Company will host a conference call at 8:00 am ET today, May 14, 2025, to review its Q3 FY2025 results. To participate in Endava’s Q3 FY2025 earnings conference call, please dial in at least five minutes prior to the scheduled start time (844) 481-2736 or (412) 317-0665 for international participants, Conference ID: Endava Call.

Investors may listen to the call on Endava’s Investor Relations website at http://investors.Endava.com. The webcast will be recorded and available for replay until Wednesday June 11, 2025.

ABOUT ENDAVA PLC:

Endava is a leading provider of next-generation technology services, dedicated to enabling its customers to accelerate growth, tackle complex challenges and thrive in evolving markets. By combining innovative technologies and deep industry expertise with an AI-native approach, Endava consults and partners with customers to create solutions that drive transformation, augment intelligence and deliver lasting impact. From ideation to production, it supports customers with tailor-made solutions at every stage of their digital transformation, regardless of industry, region or scale.

Endava’s clients span payments, insurance, finance and banking, technology, media, telecommunications, healthcare and life sciences, mobility, retail and consumer goods and more. As of March 31, 2025, 11,365 Endavans are helping clients break new ground across locations in Europe, the Americas, Asia Pacific and the Middle East.

NON-IFRS FINANCIAL INFORMATION:

To supplement Endava’s Condensed Consolidated Statements of Comprehensive Income, Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows presented in accordance with IFRS, the Company uses non-IFRS measures of certain components of financial performance in this press release. These measures include revenue growth/(decline) rate at constant currency, adjusted profit before tax, adjusted profit for the period, adjusted diluted EPS and adjusted free cash flow.

Revenue growth/(decline) rate at constant currency is calculated by translating revenue from entities reporting in foreign currencies into British Pounds using the comparable foreign currency exchange rates from the prior period. For example, the average currency rates in effect for the fiscal quarter ended March 31, 2024 were used to convert revenue for the fiscal quarter ended March 31, 2025 and the revenue for the comparable prior period.

Adjusted profit before tax ("Adjusted PBT") is defined as the Company’s profit before tax adjusted to exclude the impact of share-based compensation expense, amortisation of acquired intangible assets, realised and unrealised foreign currency exchange (gains)/losses, net, restructuring costs, and fair value movement of contingent consideration, all of which are non-cash items except for realised foreign currency exchange (gains)/losses, net. Our Adjusted PBT margin is our Adjusted PBT as a percentage of our total revenue.

Adjusted profit for the period is defined as Adjusted PBT less the adjusted tax charge for the period. The adjusted tax charge is the tax charge adjusted for the tax impact of the adjustments to PBT and the release of the deferred tax liability relating to Romanian withholding tax.

Adjusted diluted EPS is defined as Adjusted profit for the period, divided by weighted average number of shares outstanding - diluted.

Adjusted free cash flow is the Company’s net cash from operating activities, plus grants received, less net purchases of non-current assets (tangible and intangible). Adjusted free cash flow is not intended to be a measure of residual cash available for management's discretionary use since it omits significant sources and uses of cash flow, including mandatory debt repayments and changes in working capital.

Management believes these measures help illustrate underlying trends in the Company's business and uses the measures to establish budgets and operational goals, communicated internally and externally, for managing the Company's business and evaluating its performance. Management also believes the presentation of its non-IFRS financial measures enhances an investor’s overall understanding of the Company’s historical financial performance. The presentation of the Company’s non-IFRS financial measures is not meant to be considered in isolation or as a substitute for the Company’s financial results prepared in accordance with IFRS, and its non-IFRS measures may be different from non-IFRS measures used by other companies. Investors should review the reconciliation of the Company’s non-IFRS financial measures to the comparable IFRS financial measures included below, and not rely on any single financial measure to evaluate the Company’s business.

FORWARD-LOOKING STATEMENTS:

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by the use of terms and phrases such as “believe,” “expect,” "intends," "outlook," “may,” “will,” and other similar terms and phrases. Such forward-looking statements include, but are not limited to, statements regarding the macroeconomic environment, our share repurchase program and management's financial outlook for the fourth quarter and full fiscal year 2025. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements, including, but not limited to: Endava’s ability to achieve its revenue growth goals including as a result of a slower conversion of its pipeline; Endava's expectations of future operating results or financial performance; Endava’s ability to accurately forecast and achieve its announced guidance; Endava's ability to retain existing clients and attract new clients, including its ability to increase revenue from existing clients and diversify its revenue concentration; Endava’s ability to attract and retain highly-skilled IT professionals at cost-effective rates; Endava's ability to successfully identify acquisition targets, consummate acquisitions and successfully integrate acquired businesses and personnel; Endava's ability to penetrate new industry verticals and geographies and grow its revenue in current industry verticals and geographies; Endava’s ability to maintain favorable pricing and utilization rates to support its gross margin; the effects of increased competition as well as innovations by new and existing competitors in its market; the size of Endava's addressable market and market trends; Endava’s ability to adapt to technological change and industry trends and innovate solutions for its clients; Endava's plans for growth and future operations, including its ability to manage its growth; Endava's ability to effectively manage its international operations, including Endava's exposure to foreign currency exchange rate fluctuations; Endava's future financial performance, including trends in revenue, cost of sales, gross profit, selling, general and administrative expenses, finance income and expense and taxes; the impact of unstable market and economic conditions, including as a result of actual or anticipated changes in interest rates, economic inflation and the responses by central banking authorities to control such inflation, and the imposition of tariffs in the United States and abroad; and the impact of political instability, natural disaster, events of terrorism and wars, including the military conflict between Ukraine and Russia and related sanctions, as well as other risks and uncertainties discussed in the “Risk Factors” section of Endava's Annual Report on Form 20-F for the year ended June 30, 2024 filed with the SEC on September 19, 2024 and in other filings that Endava makes from time to time with the SEC, including our Current Report on Form 6-K filed with the SEC on March 28, 2025. In addition, the forward-looking statements included in this press release represent Endava’s views and expectations as of the date hereof and are based on information currently available to Endava. Endava anticipates that subsequent events and developments may cause its views to change. Endava specifically disclaims any obligation to update the forward-looking statements in this press release except as required by law. These forward-looking statements should not be relied upon as representing Endava’s views as of any date subsequent to the date hereof.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Nine Months Ended March 31

Three Months Ended March 31

2025

2024

2025

2024

£’000

REVENUE

585,479

546,338

194,838

174,365

Cost of sales

Direct cost of sales

(417,317

)

(389,864

)

(134,251

)

(130,452

)

Allocated cost of sales

(20,896

)

(19,938

)

(6,998

)

(6,720

)

Total cost of sales

(438,213

)

(409,802

)

(141,249

)

(137,172

)

GROSS PROFIT

147,266

136,536

53,589

37,193

Selling, general and administrative expenses

(124,449

)

(117,643

)

(37,135

)

(39,025

)

OPERATING PROFIT / (LOSS)

22,817

18,893

16,454

(1,832

)

Net finance (expense) / income

(2,503

)

8,496

(2,857

)

1,303

PROFIT / (LOSS) BEFORE TAX

20,314

27,389

13,597

(529

)

Tax on profit on ordinary activities

(270

)

(8,413

)

(2,651

)

(1,208

)

PROFIT / (LOSS) FOR THE PERIOD

20,044

18,976

10,946

(1,737

)

OTHER COMPREHENSIVE INCOME

Items that may be reclassified subsequently to profit or loss:

Exchange differences on translating foreign operations and net investment hedge impact

(21,554

)

(1,061

)

(7,741

)

(2,930

)

TOTAL COMPREHENSIVE (LOSS) / INCOME FOR THE PERIOD ATTRIBUTABLE TO OWNERS OF THE COMPANY

(1,510

)

17,915

3,205

(4,667

)

EARNINGS PER SHARE (EPS):

Weighted average number of shares outstanding - Basic

59,234,601

58,213,743

59,164,297

58,439,085

Weighted average number of shares outstanding - Diluted

59,566,531

58,657,357

59,434,080

58,799,599

Basic EPS (£)

0.34

0.33

0.19

(0.03

)

Diluted EPS (£)

0.34

0.32

0.18

(0.03

)

CONDENSED CONSOLIDATED BALANCE SHEETS

March 31, 2025

June 30, 2024

March 31, 2024 (1)

£’000

ASSETS - NON-CURRENT

Goodwill

490,478

515,724

262,720

Intangible assets

110,471

127,797

56,436

Property, plant and equipment

15,036

20,638

22,204

Lease right-of-use assets

44,240

53,294

52,645

Deferred tax assets

20,792

18,323

20,694

Financial assets and other receivables

9,141

10,499

7,380

TOTAL

690,158

746,275

422,079

ASSETS - CURRENT

Trade and other receivables

193,131

193,673

177,355

Corporation tax receivable

10,084

11,402

2,760

Financial assets

119

183

185

Cash and cash equivalents

68,277

62,358

190,021

TOTAL

271,611

267,616

370,321

TOTAL ASSETS

961,769

1,013,891

792,400

LIABILITIES - CURRENT

Lease liabilities

13,922

14,450

14,300

Trade and other payables

101,156

116,569

82,931

Corporation tax payable

6,088

8,556

2,524

Contingent consideration

8,444

4,619

Deferred consideration

3,349

5,840

3,205

TOTAL

124,595

153,859

107,579

LIABILITIES - NON CURRENT

Borrowings

136,456

144,754

—

Lease liabilities

35,225

43,557

42,961

Deferred tax liabilities

19,202

30,814

13,108

Contingent consideration

329

—

Deferred consideration

—

943

3,411

Other liabilities

377

509

548

TOTAL

191,589

220,577

60,028

EQUITY

Share capital

1,189

1,180

1,169

Share premium

21,280

21,208

Merger relief reserve

63,440

49,643

Retained earnings

619,216

573,640

570,878

Other reserves

(41,613

)

(20,059

)

(18,079

)

Treasury shares

(17,922

)

—

Investment in own shares

)

(26

)

(26

)

TOTAL

645,585

639,455

624,793

TOTAL LIABILITIES AND EQUITY

961,769

1,013,891

792,400

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended March 31

Three Months Ended March 31

2025

2024(2)

2025

2024(2)

£’000

OPERATING ACTIVITIES

Profit / (Loss) for the period

20,044

18,976

10,946

(1,737

)

Income tax charge

270

8,413

2,651

1,208

Non-cash adjustments

64,720

43,760

18,513

11,927

Tax paid

(6,943

)

(7,707

)

(3,157

)

(2,893

)

Net changes in working capital

(23,010

)

(8,811

)

(10,294

)

(5,497

)

Net cash from operating activities

55,081

54,631

18,659

3,008

INVESTING ACTIVITIES

Purchase of non-current assets (tangibles and intangibles)

(2,932

)

(3,696

)

(1,361

)

(1,496

)

Proceeds from disposal of non-current assets

255

219

Payment for acquisition of subsidiary, net of cash acquired

(6,676

)

(19,223

)

(776

)

(12,513

)

Other acquisition-related settlements

—

(6,680

)

—

Interest received

978

5,599

258

2,077

Net cash used in investing activities

(8,375

)

(23,964

)

(1,660

)

(11,869

)

FINANCING ACTIVITIES

Proceeds from sublease

129

Proceeds from bank loans

35,000

—

25,000

—

Repayment of borrowings

(40,842

)

—

(10,000

)

—

Repayment of lease liabilities

(9,357

)

(9,152

)

(3,198

)

(2,857

)

Repayment of lease interest

(1,447

)

(1,641

)

(458

)

(516

)

Interest and debt financing costs paid

(6,510

)

(1,611

)

(2,228

)

(1,028

)

Grant received

274

822

—

592

Proceeds from exercise of options

—

6,586

—

3,457

Payment for repurchase of own shares

(17,808

)

—

(17,808

)

—

Net cash used in financing activities

(40,598

)

(4,867

)

(8,664

)

(310

)

Net change in cash and cash equivalents

6,108

25,800

8,335

(9,171

)

Cash and cash equivalents at the beginning of the period

62,358

164,703

60,065

198,602

Exchange differences on cash and cash equivalents

(189

)

(482

)

(123

)

590

Cash and cash equivalents at the end of the period

68,277

190,021

68,277

190,021

RECONCILIATION OF IFRS FINANCIAL MEASURES TO NON-IFRS FINANCIAL MEASURES

RECONCILIATION OF REVENUE GROWTH / (DECLINE) RATE AS REPORTED UNDER IFRS TO REVENUE GROWTH / (DECLINE) RATE AT CONSTANT CURRENCY:

Nine Months Ended March 31

Three Months Ended March 31

2025

2024

2025

2024

REVENUE GROWTH / (DECLINE) RATE AS REPORTED UNDER IFRS

7.2

(9.7

11.7

(14.3

Impact of Foreign exchange rate fluctuations

1.6

2.7

0.7

2.5

REVENUE GROWTH / (DECLINE) RATE AT CONSTANT CURRENCY

8.8

(7.0

12.4

(11.8

RECONCILIATION OF ADJUSTED PROFIT BEFORE TAX AND ADJUSTED PROFIT FOR THE PERIOD:

Nine Months Ended March 31

Three Months Ended March 31

2025

2024

2025

2024

£’000

PROFIT / (LOSS) BEFORE TAX

20,314

27,389

13,597

(529

)

Adjustments:

Share-based compensation expense

28,186

29,740

6,221

6,184

Amortisation of acquired intangible assets

16,236

9,930

4,054

2,845

Foreign currency exchange losses, net

1,446

2,864

4,866

179

Restructuring costs

5,494

7,259

—

7,259

Fair value movement of contingent consideration

(5,963

)

(9,148

)

(4,092

)

(442

)

Total adjustments

45,399

40,645

11,049

16,025

ADJUSTED PROFIT BEFORE TAX

65,713

68,034

24,646

15,496

PROFIT / (LOSS) FOR THE PERIOD

20,044

18,976

10,946

(1,737

)

Adjustments:

Adjustments to profit before tax

45,399

40,645

11,049

16,025

Release of Romanian withholding tax

(3,800

)

—

Tax impact of adjustments

(8,539

)

(6,503

)

(1,857

)

(1,587

)

ADJUSTED PROFIT FOR THE PERIOD

53,104

53,118

20,138

12,701

RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE:

Nine Months Ended March 31

Three Months Ended March 31

2025

2024

2025

2024

£’000

DILUTED EARNINGS / (LOSS) PER SHARE (£)

0.34

0.32

0.18

(0.03

)

Adjustments:

Share-based compensation expense

0.47

0.51

0.10

0.11

Amortisation of acquired intangible assets

0.27

0.17

0.07

0.05

Foreign currency exchange losses, net

0.02

0.05

0.08

—

Restructuring costs

0.09

0.12

—

0.12

Fair value movement of contingent consideration

(0.09

)

(0.15

)

(0.06

)

—

Release of Romanian withholding tax

(0.06

)

—

Tax impact of adjustments

(0.15

)

(0.11

)

(0.03

)

(0.03

)

Total adjustments

0.55

0.59

0.16

0.25

ADJUSTED DILUTED EARNINGS PER SHARE (£)

0.89

0.91

0.34

0.22

RECONCILIATION OF NET CASH FROM OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW

Nine Months Ended March 31

Three Months Ended March 31

2025

2024

2025

2024

£’000

NET CASH FROM OPERATING ACTIVITIES

55,081

54,631

18,659

3,008

Adjustments:

Grant received

274

822

—

592

Net purchase of non-current assets (tangibles and intangibles)

(2,677

)

(3,660

)

(1,142

)

(1,433

)

ADJUSTED FREE CASH FLOW

52,678

51,793

17,517

2,167

SUPPLEMENTARY INFORMATION

SHARE-BASED COMPENSATION EXPENSE

Nine Months Ended March 31

Three Months Ended March 31

2025

2024

2025

2024

£’000

Direct cost of sales

19,550

21,432

4,502

5,114

Selling, general and administrative expenses

8,636

8,308

1,719

1,070

Total

28,186

29,740

6,221

6,184

DEPRECIATION AND AMORTISATION

Nine Months Ended March 31

Three Months Ended March 31

2025

2024

2025

2024

£’000

Direct cost of sales

15,571

14,898

5,158

4,849

Selling, general and administrative expenses

18,525

12,410

4,805

3,698

Total

34,096

27,308

9,963

8,547

EMPLOYEES, TOP 10 CUSTOMERS AND REVENUE SPLIT

Nine Months Ended March 31

Three Months Ended March 31

2025

2024

2025

2024

Closing number of total employees (including directors)

11,365

11,025

11,365

11,025

Average operational employees

10,452

10,446

10,272

10,127

Top 10 customers %

Number of clients with > £1m of revenue

(rolling 12 months)

136

142

136

142

Geographic split of revenue %

North America

Europe

Rest of World (RoW)

Industry vertical split of revenue %

Payments

Banking and Capital Markets

Insurance

TMT

Mobility

Healthcare

Other

FOOTNOTES

(1) Restated to include the effect of revisions arising from provisional to final acquisition accounting for DEK and Mudbath.

(2) The presentation of the Condensed Consolidated Statements of Cash Flows has been changed to separately present the repayment of lease interest from the total repayments of lease liabilities.

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