Financial Data and Key Metrics Changes - The company anticipated modest sequential growth but observed a flattening trend in demand, particularly in North America and the UK, leading to a downward revision of guidance in Q4 [9][10][13] - The company reported that the pipeline for larger deals has elongated, affecting revenue recognition and overall growth expectations [12][15] Business Line Data and Key Metrics Changes - The focus has shifted towards larger deals, which require longer durations and have been more challenging to predict in terms of timing and conversion [17][19] - The company has seen a mix of new and existing clients engaging in larger deals, with a notable emphasis on financial services and healthcare sectors [26][28] Market Data and Key Metrics Changes - There has been a noticeable weakness in demand from North America, particularly in banking, capital markets, and healthcare sectors, attributed to macroeconomic uncertainties [10][11] - The company has experienced a slower conversion rate of deals in the pipeline, with expectations that many will not contribute meaningfully until FY 2026 [28][29] Company Strategy and Development Direction - The company is focusing on core modernization and leveraging AI to enhance service delivery, which is seen as a critical area for future growth [19][58] - The acquisition of Galaxy is aimed at diversifying capabilities and entering the North American healthcare market, which aligns with the company's strategic goals [44][46] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about high uncertainty in the macroeconomic environment affecting client decision-making, particularly regarding large deals [35][36] - Despite current challenges, management believes that the demand for engineering solutions will return, driven by the need for clients to maintain competitive advantages [39][40] Other Important Information - The company has maintained stable pricing despite competitive pressures, emphasizing the importance of not sacrificing margins [41][42] - Integration of the Galaxy acquisition is progressing well, with no significant surprises reported post-integration [48][49] Q&A Session Summary Question: What is the current demand for Gen AI in client engagements? - Demand for Gen AI is increasing, moving from pilot projects to production, but it remains small and clients are cautious in their approach [56] Question: How is the company addressing potential cannibalization risks due to AI? - Management believes that technology enables faster and more efficient processes, and the focus will be on delivering high-quality engineered products while capturing margins [64]

Core View - Globant (GLOB) experienced a significant stock decline of 30% following a modest earnings miss and lowered guidance, indicating potential challenges in its operational performance [1] Company Analysis - The recent performance of Globant mirrors that of Endava (DAVA), suggesting a broader trend or issue within the sector [1] - The analyst emphasizes the importance of experience in understanding diverse business models and market dynamics, which can be crucial for evaluating companies like Globant [1] Industry Context - The analyst's extensive background includes analyzing various industries such as airlines, oil, retail, mining, fintech, and e-commerce, highlighting the interconnectedness of these sectors and their macroeconomic influences [1] - Historical crises, including the dot-com bubble and the COVID-19 pandemic, have shaped the current investment landscape, affecting companies like Globant and their market strategies [1]

Core Insights - Endava PLC reported quarterly earnings of $0.43 per share, exceeding the Zacks Consensus Estimate of $0.38 per share, and showing an increase from $0.28 per share a year ago, resulting in an earnings surprise of 13.16% [1] - The company posted revenues of $245.33 million for the quarter ended March 2025, which was 3.02% below the Zacks Consensus Estimate, compared to $221.14 million in the same quarter last year [2] - Endava shares have declined approximately 30.7% year-to-date, contrasting with the S&P 500's slight gain of 0.1% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.44, with projected revenues of $261.18 million, and for the current fiscal year, the EPS estimate is $1.49 on revenues of $1.02 billion [7] - The estimate revisions trend for Endava is mixed, leading to a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [6] Industry Context - The Computers - IT Services industry, to which Endava belongs, is currently ranked in the top 39% of over 250 Zacks industries, suggesting that companies in the top half tend to outperform those in the bottom half by more than 2 to 1 [8] - Another company in the same industry, Wix.com, is expected to report quarterly earnings of $1.66 per share, reflecting a year-over-year increase of 28.7%, with revenues anticipated to be $471.78 million, up 12.4% from the previous year [9][10]

Financial Data and Key Metrics Changes - Endava's revenue totaled £194.8 million for the three months ended March 31, 2025, representing an 11.7% increase compared to £174.4 million in the same period last year [27] - Adjusted profit before tax (PBT) for the same period was £24.6 million, up from £15.5 million year-over-year, with an adjusted PBT margin of 12.6% compared to 8.9% [28] - Adjusted diluted earnings per share (EPS) was £0.34, exceeding the guidance of £0.31 to £0.32 [28] Business Line Data and Key Metrics Changes - Revenue from the 10 largest clients accounted for 39% of total revenue, up from 34% year-over-year, with average spend per client increasing from £5.9 million to £7.5 million, a 28% year-over-year increase [29] - North America accounted for 37% of revenue, with a growth of 37.1% year-over-year, while Europe declined by 10.4% and the UK grew by 13.2% [29] Market Data and Key Metrics Changes - The weakening of the U.S. Dollar negatively impacted revenue growth, contributing to a 3% sequential decline in Q4 [33] - North America experienced a slowdown in deal conversions, particularly in mobility and healthcare sectors, while Europe performed as expected [33] Company Strategy and Development Direction - The company is focusing on closing large deals in its pipeline, which are crucial for revenue growth, and is increasing its share buyback authorization by an additional $50 million [9][10] - Partnerships with OpenAI and Google are being formalized to enhance solutions and strengthen the company's value proposition [10][11] Management's Comments on Operating Environment and Future Outlook - Management noted that the business environment is evolving rapidly, with clients showing inconsistent behavior and a slowdown in signing large contracts due to macroeconomic uncertainties [7][8] - The company expects revenue for Q4 fiscal year 2025 to be in the range of £186 million to £188 million, reflecting a constant currency revenue change of between minus 10% year-over-year [34] Other Important Information - Adjusted free cash flow was £17.5 million for the three months ended March 31, 2025, compared to £2.2 million in the same period last year [30] - The company has repurchased approximately 2 million ADSs for $39.7 million as of April 30, 2025, with $60.3 million remaining for additional repurchases [30][31] Q&A Session Summary Question: Challenges related to execution and client demand - Management indicated that internal changes have strengthened client conversations, and while there are delays in closing deals, the pipeline is building with 24 larger deals compared to 21 previously [38][41] Question: Workforce optimization and forecasting - The workforce is shifting towards higher value skills in AI, data, and cloud, with attrition increasing due to this transition [43] Question: Pricing dynamics in the current environment - Pricing remains competitive, but average day rates are stable, with some larger deals requiring concessions to secure [51][52] Question: Growth by geography and project types - North America is facing challenges primarily due to FX headwinds, while demand for AI, data, and cloud projects remains strong [54][56] Question: Utilization rates and EPS guidance - Utilization in Q3 was about 72%, expected to remain stable in Q4, with FX impacts significantly affecting EPS guidance [88][90] Question: Integration benefits from Galaxy acquisition - Most integration benefits have been factored into guidance, with further operational efficiencies expected in FY 2026 [91][92] Question: Engagements around Gen AI - The company is seeing traction in Gen AI and scaling opportunities, with a shift towards AI-enabled product capabilities [96][99]

Financial Data and Key Metrics Changes - Endava's revenue for Q3 FY2025 was £194.8 million, an increase of 11.7% compared to £174.4 million in the same period last year, with a constant currency increase of 12.4% [28] - Profit before tax for the quarter was £13.6 million, compared to a loss of £0.5 million in the same period last year [28] - Adjusted profit before tax was £24.6 million, up from £15.5 million year-over-year, with an adjusted PBT margin of 12.6% compared to 8.9% [29] - Adjusted diluted earnings per share were £0.34, exceeding guidance of £0.31 to £0.32 [29] - Adjusted free cash flow was £17.5 million, significantly higher than £2.2 million in the same period last year [31] Business Line Data and Key Metrics Changes - Revenue from the top 10 clients accounted for 39% of total revenue, up from 34% year-over-year, with average spend per client increasing by 28% [30] - North America contributed 37% of revenue, Europe 22%, the UK 35%, and the rest of the world 6% [30] - Revenue from North America grew by 37.1%, while Europe saw a decline of 10.4%, the UK grew by 13.2%, and the rest of the world declined by 16% [30] Market Data and Key Metrics Changes - The weakening of the U.S. Dollar negatively impacted revenue growth, contributing a 3% decline in Q4 [33] - North America experienced a slowdown in deal conversions, particularly in mobility and healthcare sectors [33] - The UK faced headwinds, while Europe performed as expected [33] Company Strategy and Development Direction - The company is focusing on closing large deals in the pipeline, which are crucial for revenue growth [41] - Endava plans to increase share buyback authorization by an additional $50 million as a capital allocation strategy [9] - The company is enhancing partnerships to strengthen its value proposition, including collaborations with OpenAI and Google [10][11] Management's Comments on Operating Environment and Future Outlook - Management noted a challenging business environment with inconsistent client behavior and a slowdown in signing large contracts [6][7] - The pipeline of large opportunities is growing, but conversion into signed deals is slower than anticipated [9] - Guidance for Q4 FY2025 expects revenue between £186 million to £188 million, reflecting a constant currency decline of 10% year-over-year [34] Other Important Information - The company has repurchased approximately 2 million ADSs for $39.7 million as of April 30, 2025, with $60.3 million remaining for additional repurchases [31][32] - The workforce increased by 3.1% year-over-year, with a focus on recruiting in high-demand areas like data, AI, and cloud [26] Q&A Session Summary Question: Challenges related to execution and client demand - Management acknowledged challenges in closing large deals due to external factors but noted internal changes have strengthened client conversations [38][39] Question: Workforce optimization and forecasting - The company is experiencing a shift in skill requirements, with a focus on AI, data, and cloud, leading to some attrition but confident in staffing capabilities [44] Question: Pricing dynamics in the current environment - Pricing remains competitive, with average day rates stable, although larger deals may involve concessions [52][53] Question: Growth by geography and project types - North America is facing challenges primarily due to FX headwinds and a slowdown in larger deal conversions, while AI and cloud projects are seeing demand [56][57] Question: Utilization rates and EPS guidance - Utilization rates were around 72% in Q3, expected to remain stable in Q4, with EPS impacted by FX and revenue compression [89] Question: Integration benefits from Galaxy acquisition - Most integration benefits have been factored into guidance, with further operational efficiencies expected in FY2026 [92]

Company Overview - Endava is a next-generation technology services company focused on digital transformation[14,18] - The company serves a large addressable market with a five-year Compound Annual Growth Rate (CAGR) of 162% for digital transformation investments[26,27] - As of March 31, 2025, Endava has 11,365 global employees, a 31% increase from Q3 FY24[32] - 37% of Endava's total staff are women as of March 31, 2025[32] - Endava has expanded globally to 69 cities across 29 countries[35] Financial Performance - Endava's revenue has grown at a CAGR of 205% from FY20 to FY24[52] - Revenue for Q3 FY25 increased by 117% year-over-year[55] - The top 10 clients account for 34% of total revenue in Q3 FY25[65] - Adjusted Profit Before Tax as a percentage of Revenue is 126% for Q3 FY25[82] Client Metrics - The number of clients with revenue exceeding £1 million is 136 in Q3 FY25[62] - The average spend for the top 10 clients is £21200 thousand in Q3 FY25[67] - The average spend for remaining clients is £710 thousand in Q3 FY25[69] Revenue by Region - 37% of revenue comes from the UK, 35% from Europe, 6% from North America, and 22% from Rest of World (RoW) in Q3 FY25[71]

[Executive Summary & Q3 FY2025 Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Q3%20FY2025%20Highlights) Endava achieved significant revenue growth and returned to profitability in Q3 FY2025, despite a challenging business environment, while also improving cash flow and authorizing a new share repurchase program [Q3 FY2025 Financial Performance](index=1&type=section&id=Q3%20FY2025%20Financial%20Performance) Endava reported a significant increase in revenue and a return to profitability in Q3 FY2025 compared to the prior year | Metric | Q3 FY2025 | Q3 FY2024 | YoY Change | YoY % Change | | :-------------------------------- | :-------- | :-------- | :--------- | :----------- | | Revenue | £194.8M | £174.4M | £20.4M | 11.7% | | Revenue (Constant Currency) | - | - | - | 12.4% | | Profit Before Tax | £13.6M | £(0.5)M | £14.1M | N/A | | Adjusted Profit Before Tax | £24.6M | £15.5M | £9.1M | 58.7% | | Profit for the Period | £10.9M | £(1.7)M | £12.6M | N/A | | Diluted EPS | £0.18 | £(0.03) | £0.21 | N/A | | Adjusted Diluted EPS | £0.34 | £0.22 | £0.12 | 54.5% | [CEO's Business Environment Commentary](index=1&type=section&id=CEO's%20Business%20Environment%20Commentary) Endava's CEO, John Cotterell, noted a challenging and rapidly evolving business environment, causing delays in larger contract signings despite strong innovation desire - The business environment is challenging, with clients slow to sign larger contracts despite strong innovation desire[2](index=2&type=chunk) - The opportunity pipeline continues to grow, but conversion into revenue is slower than expected[2](index=2&type=chunk) - Endava's Board of Directors authorized an additional **$50 million share repurchase**, reflecting confidence in cash flow and long-term strategy[2](index=2&type=chunk) [Other Key Metrics](index=2&type=section&id=Other%20Key%20Metrics) Operational cash flow significantly improved in Q3 FY2025, with shifts in client concentration, geographic, and industry vertical revenue contributions | Metric | Q3 FY2025 | Q3 FY2024 | YoY Change | | :------------------------------------ | :-------- | :-------- | :--------- | | Net cash from operating activities | £18.7M | £3.0M | +£15.7M | | Adjusted free cash flow | £17.5M | £2.2M | +£15.3M | | Cash and cash equivalents (period end) | £68.3M | £62.4M (Jun 30, 2024) | +£5.9M | | Headcount (period end) | 11,365 | 11,025 | +340 | | Average operational employees | 10,272 | 10,127 | +145 | | Clients with >£1M revenue (rolling 12m) | 136 | 142 | -6 | | Top 10 clients revenue % | 39% | 34% | +5% | | North America Revenue % | 37% | 30% | +7% | | Europe Revenue % | 22% | 28% | -6% | | UK Revenue % | 35% | 35% | 0% | | Rest of World Revenue % | 6% | 7% | -1% | | Payments Revenue % | 19% | 24% | -5% | | BCM Revenue % | 21% | 14% | +7% | | Insurance Revenue % | 9% | 9% | 0% | | TMT Revenue % | 18% | 24% | -6% | | Mobility Revenue % | 8% | 10% | -2% | | Healthcare Revenue % | 12% | 4% | +8% | | Other Revenue % | 13% | 15% | -2% | [Outlook & Strategic Initiatives](index=3&type=section&id=Outlook%20%26%20Strategic%20Initiatives) Endava projects continued revenue growth and adjusted diluted EPS for Q4 and full FY2025, alongside an expanded share repurchase program to enhance shareholder value [Financial Outlook](index=3&type=section&id=Financial%20Outlook) Endava provided guidance for Q4 FY2025 and the full fiscal year 2025, projecting revenue and adjusted diluted EPS ranges | Metric | Q4 FY2025 Guidance | Full FY2025 Guidance | | :-------------------------- | :------------------- | :------------------- | | Revenue | £186.0M - £188.0M | £771.5M - £773.5M | | Constant Currency Revenue Change (YoY) | (1.0)% - 0.0% | 6.0% - 6.5% | | Adjusted Diluted EPS | £0.22 - £0.24 | £1.11 - £1.13 | - The guidance assumes exchange rates on April 30, 2025 (1 GBP to 1.34 USD and 1.18 EUR)[9](index=9&type=chunk) - Endava is unable to reconcile non-IFRS guidance to IFRS measures due to uncertainty and variability of reconciling items[10](index=10&type=chunk) [Share Repurchase Program](index=3&type=section&id=Share%20Repurchase%20Program) Endava has repurchased a significant number of ADS under its existing program and authorized an additional $50 million for future repurchases - As of April 30, 2025, **1,975,906 ADS** were repurchased for **$39.7 million**[12](index=12&type=chunk) - **$60.3 million** remained for repurchase under the existing authorization[12](index=12&type=chunk) - An additional **$50 million** of share repurchases has been approved by the Board of Directors[12](index=12&type=chunk) [Company Information](index=3&type=section&id=Company%20Information) Endava, a global provider of AI-native technology services with 11,365 employees, held a Q3 FY2025 results conference call and provides investor contact information [About Endava plc](index=4&type=section&id=About%20Endava%20plc) Endava is a leading global provider of next-generation technology services, leveraging an AI-native approach to drive business transformation across diverse industries - Endava provides next-generation technology services, enabling clients to accelerate growth and tackle complex challenges[16](index=16&type=chunk) - The company utilizes an AI-native approach, combining innovative technologies with deep industry expertise[16](index=16&type=chunk) - Clients span diverse industries including payments, insurance, finance, banking, technology, media, telecommunications, healthcare, and mobility[17](index=17&type=chunk) - As of March 31, 2025, Endava had **11,365 employees** across Europe, the Americas, Asia Pacific, and the Middle East[17](index=17&type=chunk) [Conference Call Details](index=3&type=section&id=Conference%20Call%20Details) Endava hosted a conference call on May 14, 2025, to discuss its Q3 FY2025 results, with webcast and replay options available - Conference call held on May 14, 2025, at 8:00 am ET to review Q3 FY2025 results[14](index=14&type=chunk) - Dial-in numbers: (844) 481-2736 (US) or (412) 317-0665 (International), Conference ID: Endava Call[14](index=14&type=chunk) - Webcast available on http://investors.Endava.com, with replay until June 11, 2025[15](index=15&type=chunk) [Investor Contact](index=7&type=section&id=Investor%20Contact) For investor inquiries, Laurence Madsen, Head of Investor Relations, is the designated contact - Investor Contact: Laurence Madsen, Head of Investor Relations, Investors@endava.com[27](index=27&type=chunk) [IFRS Financial Statements](index=8&type=section&id=IFRS%20Financial%20Statements) The IFRS financial statements detail Endava's Q3 FY2025 return to profitability, changes in balance sheet assets and liabilities, and improved operating cash flows [Condensed Consolidated Statements of Comprehensive Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Endava's Condensed Consolidated Statements of Comprehensive Income for Q3 FY2025 show a significant turnaround from a loss to a profit compared to the prior year | Metric | Q3 FY2025 (£'000) | Q3 FY2024 (£'000) | YoY Change (£'000) | | :-------------------------------- | :----------------- | :----------------- | :----------------- | | REVENUE | 194,838 | 174,365 | 20,473 | | GROSS PROFIT | 53,589 | 37,193 | 16,396 | | OPERATING PROFIT / (LOSS) | 16,454 | (1,832) | 18,286 | | PROFIT / (LOSS) BEFORE TAX | 13,597 | (529) | 14,126 | | PROFIT / (LOSS) FOR THE PERIOD | 10,946 | (1,737) | 12,683 | | Diluted EPS (£) | 0.18 | (0.03) | 0.21 | [Condensed Consolidated Balance Sheets](index=9&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of March 31, 2025, shows a decrease in total assets, primarily from goodwill and intangible assets, with a modest increase in total equity | Metric | March 31, 2025 (£'000) | June 30, 2024 (£'000) | March 31, 2024 (£'000) | | :-------------------------- | :--------------------- | :-------------------- | :--------------------- | | Goodwill | 490,478 | 515,724 | 262,720 | | Intangible assets | 110,471 | 127,797 | 56,436 | | Cash and cash equivalents | 68,277 | 62,358 | 190,021 | | TOTAL ASSETS | 961,769 | 1,013,891 | 792,400 | | TOTAL LIABILITIES | 316,184 | 374,436 | 167,607 | | TOTAL EQUITY | 645,585 | 639,455 | 624,793 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Endava's cash flow statement for Q3 FY2025 indicates a strong improvement in operating activities, while investing and financing activities resulted in net cash outflows | Metric | Q3 FY2025 (£'000) | Q3 FY2024 (£'000) | YoY Change (£'000) | | :-------------------------------- | :----------------- | :----------------- | :----------------- | | Net cash from operating activities | 18,659 | 3,008 | 15,651 | | Net cash used in investing activities | (1,660) | (11,869) | 10,209 | | Net cash used in financing activities | (8,664) | (310) | (8,354) | | Net change in cash and cash equivalents | 8,335 | (9,171) | 17,506 | | Cash and cash equivalents at period end | 68,277 | 190,021 | (121,744) | [Non-IFRS Financial Information & Reconciliations](index=5&type=section&id=Non-IFRS%20Financial%20Information%20%26%20Reconciliations) This section defines Endava's non-IFRS financial measures and provides detailed reconciliations for revenue growth, adjusted profit before tax, adjusted profit for the period, adjusted diluted EPS, and adjusted free cash flow [Non-IFRS Measures Definitions](index=5&type=section&id=Non-IFRS%20Measures%20Definitions) Endava utilizes several non-IFRS financial measures to provide a clearer view of its underlying business performance, excluding certain non-cash or non-recurring items - Revenue growth/(decline) rate at constant currency translates foreign currency revenue using prior period exchange rates[19](index=19&type=chunk) - Adjusted profit before tax (Adjusted PBT) excludes share-based compensation, amortization of acquired intangibles, foreign currency exchange (gains)/losses, restructuring costs, and fair value movement of contingent consideration[20](index=20&type=chunk) - Adjusted profit for the period is Adjusted PBT less the adjusted tax charge[21](index=21&type=chunk) - Adjusted diluted EPS is Adjusted profit for the period divided by diluted weighted average shares outstanding[21](index=21&type=chunk) - Adjusted free cash flow is net cash from operating activities plus grants received, less net purchases of non-current assets[22](index=22&type=chunk) [Reconciliation of Revenue Growth Rate](index=11&type=section&id=Reconciliation%20of%20Revenue%20Growth%20Rate) The reconciliation shows that foreign exchange rate fluctuations had a positive impact on reported revenue growth for Q3 FY2025 | Metric | Q3 FY2025 | Q3 FY2024 | | :------------------------------------------ | :-------- | :-------- | | REVENUE GROWTH / (DECLINE) RATE AS REPORTED UNDER IFRS | 11.7 % | (14.3 %) | | Impact of Foreign exchange rate fluctuations | 0.7 % | 2.5 % | | REVENUE GROWTH / (DECLINE) RATE AT CONSTANT CURRENCY | 12.4 % | (11.8 %) | [Reconciliation of Adjusted Profit Before Tax and Adjusted Profit for the Period](index=11&type=section&id=Reconciliation%20of%20Adjusted%20Profit%20Before%20Tax%20and%20Adjusted%20Profit%20for%20the%20Period) Adjustments for Q3 FY2025, primarily share-based compensation and amortization, significantly increased the adjusted profit before tax and adjusted profit for the period | Metric | Q3 FY2025 (£'000) | Q3 FY2024 (£'000) | | :------------------------------------ | :----------------- | :----------------- | | PROFIT / (LOSS) BEFORE TAX | 13,597 | (529) | | Total adjustments | 11,049 | 16,025 | | ADJUSTED PROFIT BEFORE TAX | 24,646 | 15,496 | | PROFIT / (LOSS) FOR THE PERIOD | 10,946 | (1,737) | | ADJUSTED PROFIT FOR THE PERIOD | 20,138 | 12,701 | [Reconciliation of Adjusted Diluted Earnings Per Share](index=12&type=section&id=Reconciliation%20of%20Adjusted%20Diluted%20Earnings%20Per%20Share) The reconciliation highlights the impact of various adjustments, such as share-based compensation and amortization, on diluted EPS, leading to a higher adjusted diluted EPS | Metric | Q3 FY2025 (£) | Q3 FY2024 (£) | | :------------------------------------ | :------------ | :------------ | | DILUTED EARNINGS / (LOSS) PER SHARE | 0.18 | (0.03) | | Total adjustments | 0.16 | 0.25 | | ADJUSTED DILUTED EARNINGS PER SHARE | 0.34 | 0.22 | [Reconciliation of Adjusted Free Cash Flow](index=12&type=section&id=Reconciliation%20of%20Adjusted%20Free%20Cash%20Flow) Adjusted free cash flow for Q3 FY2025 was £17.5 million, a substantial increase from the prior year, after accounting for grants and non-current asset purchases | Metric | Q3 FY2025 (£'000) | Q3 FY2024 (£'000) | | :------------------------------------ | :----------------- | :----------------- | | NET CASH FROM OPERATING ACTIVITIES | 18,659 | 3,008 | | Adjustments: | | | | Grant received | — | 592 | | Net purchase of non-current assets | (1,142) | (1,433) | | ADJUSTED FREE CASH FLOW | 17,517 | 2,167 | [Supplementary Information](index=13&type=section&id=Supplementary%20Information) Supplementary information details Endava's share-based compensation and depreciation expenses, along with employee count, customer concentration, and revenue splits by geography and industry vertical [Share-Based Compensation Expense](index=13&type=section&id=Share-Based%20Compensation%20Expense) Total share-based compensation expense for Q3 FY2025 remained relatively stable compared to the prior year, primarily allocated to direct cost of sales | Category | Q3 FY2025 (£'000) | Q3 FY2024 (£'000) | | :---------------------------------- | :----------------- | :----------------- | | Direct cost of sales | 4,502 | 5,114 | | Selling, general and administrative expenses | 1,719 | 1,070 | | Total | 6,221 | 6,184 | [Depreciation and Amortisation](index=13&type=section&id=Depreciation%20and%20Amortisation) Total depreciation and amortisation expense for Q3 FY2025 increased, with increases in both direct cost of sales and selling, general and administrative expenses | Category | Q3 FY2025 (£'000) | Q3 FY2024 (£'000) | | :---------------------------------- | :----------------- | :----------------- | | Direct cost of sales | 5,158 | 4,849 | | Selling, general and administrative expenses | 4,805 | 3,698 | | Total | 9,963 | 8,547 | [Employees, Top 10 Customers and Revenue Split](index=14&type=section&id=Employees,%20Top%2010%20Customers%20and%20Revenue%20Split) Endava's employee count increased slightly, while client concentration grew, and revenue shares shifted significantly across geographies and industry verticals | Metric | Q3 FY2025 | Q3 FY2024 | YoY Change | | :------------------------------------ | :-------- | :-------- | :--------- | | Closing number of total employees | 11,365 | 11,025 | +340 | | Average operational employees | 10,272 | 10,127 | +145 | | Top 10 customers % | 39% | 34% | +5% | | Number of clients with > £1m of revenue | 136 | 142 | -6 | | Geographic split of revenue %: | | | | | North America | 37% | 30% | +7% | | Europe | 22% | 28% | -6% | | UK | 35% | 35% | 0% | | Rest of World (RoW) | 6% | 7% | -1% | | Industry vertical split of revenue %: | | | | | Payments | 19% | 24% | -5% | | Banking and Capital Markets | 21% | 14% | +7% | | Insurance | 9% | 9% | 0% | | TMT | 18% | 24% | -6% | | Mobility | 8% | 10% | -2% | | Healthcare | 12% | 4% | +8% | | Other | 13% | 15% | -2% | [Legal & Disclosures](index=3&type=section&id=Legal%20%26%20Disclosures) This section outlines Endava's forward-looking statements, emphasizing inherent risks and uncertainties, and provides footnotes regarding financial statement restatements and cash flow presentation changes [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section contains standard forward-looking statements regarding Endava's future expectations, highlighting that actual results may differ materially due to various risks and uncertainties - Statements regarding macroeconomic environment, share repurchase program, and financial outlook for Q4 and full FY2025 are forward-looking[25](index=25&type=chunk) - Actual results may differ materially due to known and unknown risks and uncertainties, including slower pipeline conversion, client retention, talent acquisition, and market competition[25](index=25&type=chunk)[26](index=26&type=chunk) - Endava disclaims any obligation to update forward-looking statements except as required by law[26](index=26&type=chunk) [Footnotes](index=15&type=section&id=Footnotes) Footnotes clarify that certain financial statements were restated to reflect final acquisition accounting and changes in cash flow presentation - Financial statements were restated to include revisions from provisional to final acquisition accounting for DEK and Mudbath[39](index=39&type=chunk) - The presentation of Condensed Consolidated Statements of Cash Flows was changed to separately present repayment of lease interest[39](index=39&type=chunk)

Group 1 - Endava plc is set to release its third-quarter earnings results on May 14, with analysts expecting earnings of 31 cents per share, up from 22 cents per share in the same period last year [1] - The company is projected to report quarterly revenue of $197.84 million, an increase from $174.37 million a year earlier [1] - Endava reported better-than-expected second-quarter financial results on February 20 [1] Group 2 - Endava shares fell 0.4% to close at $21.41 on Tuesday [2] - Analysts have provided various ratings for Endava, with Needham maintaining a Buy rating but lowering the price target from $43 to $38 [7] - Morgan Stanley maintained an Equal-Weight rating and raised the price target from $33 to $35 [7] - B of A Securities initiated coverage with a Neutral rating and a price target of $29 [7] - TD Cowen maintained a Buy rating and raised the price target from $35 to $36 [7] - Citigroup maintained a Neutral rating and cut the price target from $30 to $27 [7]

Core Insights - Endava PLC Sponsored ADR (DAVA) is currently rated as a Strong Buy with a Zacks Rank of 1, while Epam (EPAM) has a Zacks Rank of 4, indicating a Sell recommendation [3] - DAVA shows a more favorable earnings estimate revision activity compared to EPAM, suggesting a better analyst outlook for DAVA [3][7] Valuation Metrics - DAVA has a forward P/E ratio of 11.48, while EPAM's forward P/E is 13.84, indicating that DAVA may be undervalued relative to EPAM [5] - The PEG ratio for DAVA is 0.52, which is significantly lower than EPAM's PEG ratio of 2, suggesting that DAVA offers better value considering its expected earnings growth [5] - DAVA's P/B ratio stands at 1.20, compared to EPAM's P/B ratio of 2.27, further supporting the notion that DAVA is more attractively valued [6] Value Grades - Based on the analysis of various valuation metrics, DAVA has earned a Value grade of B, while EPAM has a Value grade of C, indicating that DAVA is perceived as a better value investment [6]

Group 1 - Endava Plc (NYSE: DAVA) has experienced a decline of over 45% in the last year, indicating significant market challenges [1] - The company's margins are tighter, and free cash flow has been significantly squeezed [1] - Revenue for Endava fell by approximately 7% at the end of FY2024, reflecting a downturn in performance [1] Group 2 - The narrative surrounding Endava suggests it is a mid-tier services firm struggling to maintain its position in the market [1]