Endava Announces First Quarter Fiscal Year 2025 Results

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Last update:

Q1 FY2025

3.5% Year on Year Revenue Increase to £195.1 million

5.2% Revenue Increase at Constant Currency

Diluted EPS £0.04 compared to £0.21 in the prior comparative period

Adjusted Diluted EPS £0.25 compared to £0.39 in the prior comparative period

LONDON–(BUSINESS WIRE)–Endava plc (NYSE: DAVA) (“Endava” or the “Company”), a leading technology services company combining world-class engineering, industry expertise and a people-centric mindset, today announced results for the three months ended September 30, 2024, the first quarter of its 2025 fiscal year (“Q1 FY2025”).


“We are pleased with our results for the first quarter of FY25 showing both year on year and quarter on quarter revenue growth. We believe our business is well set up for new growth areas whilst reducing our industry vertical concentration. Our focus on AI is establishing leading edge propositions to solve real business challenges and our acquisition of GalaxE has enhanced our core modernization capability, adding patented IP that provides clients with a more efficient and cost effective path to their new digital future. These capabilities give us access to larger, more complex transformation programmes, with a powerful proprietary set of accelerators, providing us with a compelling sales offering. Our focus on digital solutions, initially built around the core, is now extending directly into the core itself,” said John Cotterell, Endava’s CEO.

FIRST QUARTER FISCAL YEAR 2025 FINANCIAL HIGHLIGHTS:

  • Revenue for Q1 FY2025 was £195.1 million, an increase of 3.5% compared to £188.4 million in the same period in the prior year.
  • Revenue increase at constant currency (a non-IFRS measure)* was 5.2% for Q1 FY2025.
  • Profit before tax for Q1 FY2025 was £4.2 million, compared to £17.3 million in the same period in the prior year.
  • Adjusted profit before tax (a non-IFRS measure)* for Q1 FY2025 was £19.2 million, or 9.9% of revenue, compared to £29.8 million, or 15.8% of revenue, in the same period in the prior year.
  • Profit for the period was £2.2 million, resulting in a diluted earnings per share (“EPS”) of £0.04, compared to profit of £12.4 million and diluted EPS of £0.21 in the same period in the prior year.
  • Adjusted profit for the period (a non-IFRS measure)* was £15.1 million, resulting in adjusted diluted EPS (a non-IFRS measure)* of £0.25, compared to adjusted profit for the period of £22.9 million and adjusted diluted EPS of £0.39 in the same period in the prior year.

CASH FLOW:

  • Net cash from operating activities was £4.4 million in Q1 FY2025, compared to net cash from operating activities of £16.6 million in the same period in the prior year.
  • Adjusted free cash flow (a non-IFRS measure)* was £3.5 million in Q1 FY2025, compared to £16.0 million in the same period in the prior year.
  • At September 30, 2024, Endava had cash and cash equivalents of £52.8 million, compared to £62.4 million at June 30, 2024.

* 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 SEPTEMBER 30, 2024:

  • Headcount totaled 11,821 at September 30, 2024, with an average of 10,627 operational employees in Q1 FY2025, compared to a headcount of 11,761 at September 30, 2023 and an average of 10,751 operational employees in the same period in the prior year.
  • Number of clients with over £1 million in revenue on a rolling twelve-month basis was 147 at September 30, 2024, compared to 145 clients at September 30, 2023.
  • Top 10 clients accounted for 36% of revenue in Q1 FY2025, compared to 35% in the same period in the prior year.
  • By geographic region, 39% of revenue was generated in North America, 25% was generated in Europe, 31% was generated in the United Kingdom and 5% was generated in the rest of the world in Q1 FY2025. This compares to 30% in North America, 25% in Europe, 35% in the United Kingdom and 10% in the Rest of the World in the same period in the prior year.
  • By industry vertical, 20% of revenue was generated from Payments, 17% from BCM, 9% from Insurance, 21% from TMT, 9% from Mobility, 12% from Healthcare, and 12% from Other in Q1 FY2025. This compares to 27% from Payments, 14% from BCM, 8% from Insurance, 23% from TMT, 11% from Mobility, 4% from Healthcare, and 13% from Other in the same period in the prior year.

OUTLOOK:

Second Quarter Fiscal Year 2025:

Endava expects revenue will be in the range of £195.0 million to £197.0 million, representing a constant currency revenue increase of between 8.5% and 9.5% on a year over year basis. Endava expects adjusted diluted EPS to be in the range of £0.24 to £0.25 per share.

Full Fiscal Year 2025:

Endava expects revenue will be in the range of £800.0 million to £810.0 million, representing a constant currency revenue increase of between 10.0% and 11.5% on a year over year basis. Endava expects adjusted diluted EPS to be in the range of £1.12 to £1.17 per share.

This above guidance for the second quarter and full fiscal year 2025 assumes the exchange rates on October 31, 2024 (when the exchange rate was 1 British Pound to 1.30 US Dollar and 1.19 Euro).

Endava is not able, at this time, to reconcile its expectations for the second 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.

CONFERENCE CALL DETAILS:

The Company will host a conference call at 8:00 am ET today, November 12, 2024, to review its Q1 FY2025 results. To participate in Endava’s Q1 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 Friday, December 13, 2024.

ABOUT ENDAVA PLC:

We are a leading provider of next-generation technology services, dedicated to enabling our customers to drive real impact and meaningful change. By combining world-class engineering, deep industry expertise and a customer-centric mindset, we consult and partner with our customers to create technological solutions that fuel transformation and empower businesses to succeed in the AI-driven digital shift. From ideation to production, we support our 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 September 30, 2024, 11,821 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 September 30, 2023 were used to convert revenue for the fiscal quarter ended September 30, 2024 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, 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 tax charge for the period adjusted for the tax impact of the adjustments to PBT.

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,” “outlook,” “may,” “will,” and other similar terms and phrases. Such forward-looking statements include, but are not limited to, the statements regarding Endava’s ability to develop AI into leading edge propositions to solve real business challenges; the impact of GalaxE on Endava’s capabilities; Endava’s business initiatives, growth opportunities and offerings; Endava’s addressable market size; and management’s financial outlook for the second 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 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. 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

 

 

Three Months Ended

September 30

 

2024

2023

 

£’000

£’000

REVENUE

195,052

 

188,421

 

Cost of sales

 

 

Direct cost of sales

(139,520

)

(127,319

)

Allocated cost of sales

(6,873

)

(6,632

)

Total cost of sales

(146,393

)

(133,951

)

GROSS PROFIT

48,659

 

54,470

 

Selling, general and administrative expenses

(43,969

)

(38,363

)

OPERATING PROFIT

4,690

 

16,107

 

Net finance income/(expense)

(477

)

1,206

 

PROFIT BEFORE TAX

4,213

 

17,313

 

Tax on profit on ordinary activities

(1,966

)

(4,947

)

PROFIT FOR THE PERIOD

2,247

 

12,366

 

OTHER COMPREHENSIVE INCOME

 

 

Items that may be reclassified subsequently to profit or loss:

 

 

Exchange differences on translating foreign operations and net investment hedge impact

(23,340

)

4,742

 

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

(21,093

)

17,108

 

 

 

 

EARNINGS PER SHARE (EPS):

 

 

Weighted average number of shares outstanding – Basic

59,051,116

 

57,901,454

 

Weighted average number of shares outstanding – Diluted

59,430,225

 

58,438,198

 

Basic EPS (£)

0.04

 

0.21

 

Diluted EPS (£)

0.04

 

0.21

 

CONDENSED CONSOLIDATED BALANCE SHEETS

 

 

September 30, 2024

June 30, 2024

September 30, 2023

(1)

 

£’000

£’000

£’000

ASSETS – NON-CURRENT

 

 

 

Goodwill

494,409

 

515,724

 

257,523

 

Intangible assets

115,598

 

127,797

 

65,450

 

Property, plant and equipment

18,197

 

20,638

 

24,506

 

Lease right-of-use assets

50,474

 

53,294

 

65,100

 

Deferred tax assets

18,613

 

18,323

 

21,371

 

Financial assets and other receivables

9,455

 

10,499

 

3,177

 

TOTAL

706,746

 

746,275

 

437,127

 

ASSETS – CURRENT

 

 

 

Trade and other receivables

198,201

 

193,673

 

187,434

 

Corporation tax receivable

9,783

 

11,402

 

5,347

 

Financial assets

181

 

183

 

67

 

Cash and cash equivalents

52,811

 

62,358

 

168,191

 

TOTAL

260,976

 

267,616

 

361,039

 

TOTAL ASSETS

967,722

 

1,013,891

 

798,166

 

LIABILITIES – CURRENT

 

 

 

Lease liabilities

14,161

 

14,450

 

14,698

 

Trade and other payables

102,146

 

116,569

 

84,617

 

Corporation tax payable

8,645

 

8,556

 

7,549

 

Contingent consideration

6,651

 

8,444

 

8,067

 

Deferred consideration

5,749

 

5,840

 

155

 

TOTAL

137,352

 

153,859

 

115,086

 

LIABILITIES – NON CURRENT

 

 

 

Borrowings

132,638

 

144,754

 

 

Lease liabilities

40,811

 

43,557

 

54,253

 

Deferred tax liabilities

29,110

 

30,814

 

14,047

 

Contingent consideration

 

 

9,336

 

Deferred consideration

943

 

943

 

5,676

 

Other liabilities

424

 

509

 

522

 

TOTAL

203,926

 

220,577

 

83,834

 

EQUITY

 

 

 

Share capital

1,180

 

1,180

 

1,155

 

Share premium

21,280

 

21,280

 

14,635

 

Merger relief reserve

63,440

 

63,440

 

42,805

 

Retained earnings

583,969

 

573,640

 

546,111

 

Other reserves

(43,399

)

(20,059

)

(5,434

)

Investment in own shares

(26

)

(26

)

(26

)

TOTAL

626,444

 

639,455

 

599,246

 

TOTAL LIABILITIES AND EQUITY

967,722

 

1,013,891

 

798,166

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

Three Months Ended

September 30(2)

 

2024

2023

 

£’000

£’000

OPERATING ACTIVITIES

 

 

Profit for the period

2,247

 

12,366

 

Income tax charge

1,966

 

4,947

 

Non-cash adjustments

23,593

 

15,800

 

Tax paid

(1,320

)

(2,348

)

Net changes in working capital

(22,112

)

(14,178

)

Net cash from operating activities

4,374

 

16,587

 

 

 

 

INVESTING ACTIVITIES

 

 

Purchase of non-current assets (tangibles and intangibles)

(1,135

)

(807

)

Proceeds from disposal of non-current assets

36

 

3

 

Payment for acquisition of subsidiary, net of cash acquired

(68

)

(4,182

)

Other acquisition-related settlements

 

(6,680

)

Interest received

367

 

1,565

 

Net cash used in investing activities

(800

)

(10,101

)

 

 

 

FINANCING ACTIVITIES

 

 

Proceeds from sublease

30

 

56

 

Repayment of borrowings

(7,000

)

 

Repayment of lease liabilities

(3,093

)

(3,348

)

Repayment of lease interest

(507

)

(572

)

Interest and debt financing costs paid

(2,252

)

(287

)

Grant received

274

 

207

 

Proceeds from exercise of options

 

11

 

Net cash used in financing activities

(12,548

)

(3,933

)

Net change in cash and cash equivalents

(8,974

)

2,553

 

 

 

 

Cash and cash equivalents at the beginning of the period

62,358

 

164,703

 

Exchange differences on cash and cash equivalents

(573

)

935

 

Cash and cash equivalents at the end of the period

52,811

 

168,191

 

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:

 

 

Three Months Ended

September 30

 

2024

2023

REVENUE GROWTH/(DECLINE) RATE AS REPORTED UNDER IFRS

3.5

%

(3.9

%)

Impact of Foreign exchange rate fluctuations

1.7

%

3.3

%

REVENUE GROWTH/(DECLINE) RATE AT CONSTANT CURRENCY

5.2

%

(0.6

%)

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

 

 

Three Months Ended

September 30

 

2024

2023

 

£’000

£’000

 

 

 

PROFIT BEFORE TAX

4,213

 

17,313

 

Adjustments:

 

 

Share-based compensation expense

11,021

 

9,939

 

Amortisation of acquired intangible assets

6,146

 

3,401

 

Foreign currency exchange (gains)/losses, net

(846

)

(2,079

)

Fair value movement of contingent consideration

(1,302

)

1,236

 

Total adjustments

15,019

 

12,497

 

ADJUSTED PROFIT BEFORE TAX

19,232

 

29,810

 

 

 

 

PROFIT FOR THE PERIOD

2,247

 

12,366

 

Adjustments:

 

 

Adjustments to profit before tax

15,019

 

12,497

 

Tax impact of adjustments

(2,171

)

(1,939

)

ADJUSTED PROFIT FOR THE PERIOD

15,095

 

22,924

 

RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE:

 

 

Three Months Ended

September 30

 

2024

2023

 

£’000

£’000

 

 

 

DILUTED EARNINGS PER SHARE (£)

0.04

 

0.21

 

Adjustments:

 

 

Share-based compensation expense

0.19

 

0.17

 

Amortisation of acquired intangible assets

0.10

 

0.06

 

Foreign currency exchange (gains)/losses, net

(0.01

)

(0.04

)

Fair value movement of contingent consideration

(0.03

)

0.02

 

Tax impact of adjustments

(0.04

)

(0.03

)

Total adjustments

0.21

 

0.18

 

ADJUSTED DILUTED EARNINGS PER SHARE (£)

0.25

 

0.39

 

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

 

 

Three Months Ended

September 30

 

2024

2023

 

£’000

£’000

 

 

 

NET CASH FROM OPERATING ACTIVITIES

4,374

 

16,587

 

Adjustments:

 

 

Grant received

274

 

207

 

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

(1,099

)

(804

)

ADJUSTED FREE CASH FLOW

3,549

 

15,990

 

SUPPLEMENTARY INFORMATION

 

SHARE-BASED COMPENSATION EXPENSE

 

 

Three Months Ended

September 30

 

2024

2023

 

£’000

£’000

 

 

 

Direct cost of sales

7,794

6,802

Selling, general and administrative expenses

3,227

3,137

Total

11,021

9,939

DEPRECIATION AND AMORTISATION

 

 

Three Months Ended

September 30

 

2024

2023

 

£’000

£’000

 

 

 

Direct cost of sales

5,180

5,196

Selling, general and administrative expenses

6,897

4,223

Total

12,077

9,419

EMPLOYEES, TOP 10 CUSTOMERS AND REVENUE SPLIT

 

 

Three Months Ended

September 30

 

2024

2023

 

 

 

Closing number of total employees (including directors)

11,821

 

11,761

 

Average operational employees

10,627

 

10,751

 

 

 

 

Top 10 customers %

36

%

35

%

Number of clients with > £1m of revenue

(rolling 12 months)

147

 

145

 

 

 

 

Geographic split of revenue %

 

 

North America

39

%

30

%

Europe

25

%

25

%

UK

31

%

35

%

Rest of World (RoW)

5

%

10

%

 

 

 

Industry vertical split of revenue %

 

 

Payments

20

%

27

%

Banking and Capital Markets

17

%

14

%

Insurance

9

%

8

%

TMT

21

%

23

%

Mobility

9

%

11

%

Healthcare

12

%

4

%

Other

12

%

13

%

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 Consolidated Statement of Cash Flows has been changed to separately present the repayment of lease interest from the total repayments of lease liabilities.

Contacts

INVESTOR CONTACT:
Endava plc

Laurence Madsen, Head of Investor Relations

[email protected]

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