Summary of Endava's Conference Call Company Overview - **Company**: Endava - **Industry**: IT Services and Digital Transformation - **Key Personnel**: CEO John Cotterell, CFO Mark Thurston - **Company History**: Founded in February 2000, recently celebrated its 20th anniversary [3][4] Core Service Offerings - Endava specializes in digital transformation services, focusing on ideation to production with multidisciplinary teams [4][5] - The company has evolved through various technology waves, including mobile, cloud, and currently AI [5][6] Market Position and Growth - Historically, Endava has experienced organic growth rates of 20% to 30% annually [5] - The company is currently facing challenges due to the fundamental shift brought by AI, impacting discretionary spending [6][9] AI Implementation and Challenges - The implementation of AI in enterprise environments is a significant focus, with clients requiring robust engineering solutions to avoid issues like hallucinations in AI outputs [10][11] - Business cases for AI have improved as processing costs decrease, making them more viable for clients [12][13] - Legacy systems pose challenges for effective AI implementation, but AI can assist in modernizing these systems [14][15] Deal Dynamics - There is an increase in the number and size of large deals, driven by extended ideation phases with clients [18][19] - The ideation phase for AI projects has lengthened to over a year, compared to 3-6 months during previous digital transformation waves [21][22] - Clients are learning to navigate the complexities of AI integration, which is expected to lead to a more regular cadence of deal closures [19][27] Sector Performance - **Banking and Capital Markets (BCM)**: Strong growth driven by core modernization and payments capabilities [28][29] - **Insurance**: Steady growth in the low double digits, with a focus on data and AI-driven solutions [30][32] - **Payments**: Experienced a significant reduction in revenue due to client spend pullbacks, but is expected to stabilize [35][36] - **Healthcare**: Growth opportunities are emerging, particularly in core modernization and AI integration following the Galaxy acquisition [36][39] Galaxy Acquisition - The integration of Galaxy has progressed smoothly, enhancing Endava's capabilities in healthcare and expanding its market reach [42][43] - The acquisition has allowed Endava to leverage AI tools for better client service and operational efficiency [38][39] Internal AI Utilization - Endava aims to be "AI native," with all employees using AI tools like ChatGPT to enhance productivity [48][49] - The company anticipates significant productivity gains from AI, which may lead to increased demand for services rather than cannibalization of existing models [50][53] Conclusion - Endava is navigating a transformative period marked by AI integration and evolving client needs, with a focus on maintaining growth through modernization and innovative service offerings [54][55]

Summary of Endava's Conference Call Company Overview - **Company**: Endava - **Industry**: IT Services, specifically focusing on digital transformation and AI integration Key Points and Arguments 1. **Market Shift**: Endava has been a leader in digital transformation for the past 20 years, but the advent of AI, particularly with ChatGPT, has initiated a new phase termed the "digital shift" [5][4][3] 2. **AI Integration**: The company emphasizes the importance of integrating AI into both customer-facing solutions and internal processes, which requires addressing legacy systems [7][8][6] 3. **Complexity of AI**: The engineering challenges associated with AI, such as hallucinations and regulatory compliance, have made implementation more complex than anticipated [9][8] 4. **Core Modernization**: Endava has acquired Galaxy, which provides tools for understanding and modernizing legacy code, crucial for successful AI integration [12][13] 5. **Diversification**: Since its IPO in 2018, Endava has diversified its client base across various industries and geographies, moving beyond its initial concentration in payments and financial services [14][15][16] 6. **Revenue Trends**: The company is experiencing a transition in revenue generation from traditional digital transformation projects to larger AI-enabled deals, which has caused a temporary flattening in business growth [17][18] 7. **Pipeline Development**: Endava is focused on closing larger deals, which are expected to drive future growth, despite current macroeconomic challenges [18][17] 8. **AI Skills Development**: The company has established centers of excellence to enhance AI skills among its workforce, which is essential for adapting to the new market demands [22][23] 9. **Client Engagement**: While many clients are still hesitant to adopt AI solutions, Endava is working to integrate AI into its daily operations to improve productivity [26][27] 10. **Market Opportunities**: Significant growth is anticipated in the banking and capital markets sector, which has already seen a 40% increase in activity over the past year [38][39] 11. **Automotive Sector Challenges**: The automotive industry is currently facing tariff challenges, which have slowed down technology investments, but recovery is expected within three to six months [41][42] 12. **Margin Goals**: Endava aims to improve its gross margins by shifting towards outcome-based contracts, which will allow for better margin capture compared to traditional time and materials contracts [45][46] 13. **Payments Industry**: The company continues to see growth opportunities in the payments sector, particularly as investments shift from payment processors to large banks [48][49] Additional Important Content - **AI's Role in Agile Delivery**: The integration of AI is expected to significantly enhance agile delivery processes, allowing for faster iterations and improved project outcomes [28][29] - **Revenue Composition Changes**: The structure of large deals is evolving, with a focus on immediate revenue generation rather than gradual scaling [32][33] - **Predictability of Large Deals**: There is increased uncertainty in predicting the timing of large deals due to macroeconomic factors and technological complexities [34][36] This summary encapsulates the key insights from Endava's conference call, highlighting the company's strategic focus on AI integration, market diversification, and the evolving landscape of client engagement and revenue generation.

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]