Core Viewpoint - Endava PLC reported quarterly earnings of $0.38 per share, exceeding the Zacks Consensus Estimate of $0.32 per share, and showing a slight increase from $0.37 per share a year ago, indicating an earnings surprise of 18.75% [1][2] Financial Performance - The company achieved revenues of $250.63 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 0.66% and up from $227.96 million year-over-year [2] - Over the last four quarters, Endava has exceeded consensus EPS estimates three times and topped revenue estimates two times [2] Stock Performance and Outlook - Endava shares have declined approximately 1.3% since the beginning of the year, while the S&P 500 has gained 4.5% [3] - The current consensus EPS estimate for the upcoming quarter is $0.38 on revenues of $256.16 million, and for the current fiscal year, it is $1.45 on revenues of $1.02 billion [7] Industry Context - The Computers - IT Services industry, to which Endava belongs, is currently ranked in the top 29% of over 250 Zacks industries, suggesting a favorable industry outlook [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact stock performance [5][6]

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Revenue Performance - Revenue for Q2 FY2025 was £195.6 million, an increase of 6.6% compared to £183.6 million in the same period in the prior year[4]. - Revenue increase at constant currency was 9.1% for Q2 FY2025[4]. - Revenue for the six months ended December 31, 2024, increased to £390,641,000, representing a growth of 5.0% compared to £371,973,000 in the same period of 2023[32]. - The revenue growth rate at constant currency for the six months ended December 31, 2024, was 7.0%, compared to a decline of 4.5% in the same period of 2023[37]. - Endava expects revenue for Q3 FY2025 to be in the range of £198.0 million to £200.0 million, representing a constant currency revenue increase of between 13.0% and 14.0% year over year[10]. - Full Fiscal Year 2025 revenue is expected to be in the range of £795.0 million to £800.0 million, representing a constant currency revenue increase of between 8.5% and 9.0% year over year[11]. Profitability - Profit before tax for Q2 FY2025 was £2.5 million, compared to £10.6 million in the same period in the prior year[4]. - Adjusted profit before tax for Q2 FY2025 was £21.8 million, or 11.2% of revenue, compared to £22.7 million, or 12.4% of revenue, in the same period in the prior year[4]. - Profit before tax for the six months ended December 31, 2024, decreased to £6,717,000 from £27,918,000 in the same period of 2023[38]. - Adjusted profit before tax for the six months ended December 31, 2024, was £41,067,000, down from £52,538,000 in the same period of 2023[38]. Earnings Per Share - Diluted EPS for Q2 FY2025 was £0.11, compared to £0.14 in the prior comparative period[4]. - Basic earnings per share (EPS) for the three months ended December 31, 2024, was £0.12, compared to £0.14 in the same period of 2023[33]. Client Metrics - As of December 31, 2024, the number of clients with over £1 million in revenue was 141, down from 150 clients at December 31, 2023[8]. - The number of clients generating over £1 million in revenue over the last 12 months decreased to 141 from 150, a decline of 6%[43]. - Top 10 clients accounted for 36% of revenue in Q2 FY2025, compared to 34% in the same period in the prior year[8]. Sector Performance - Revenue from North America increased to 39% of total revenue, up from 31% in the previous year, showing an 8 percentage point increase[43]. - The percentage of revenue from the Banking and Capital Markets sector rose to 18% in the six months ended December 31, 2024, compared to 14% in 2023, marking a 4 percentage point increase[43]. - Revenue from the Healthcare sector increased significantly to 12% in the six months ended December 31, 2024, compared to 4% in the same period last year, a growth of 8 percentage points[43]. - The percentage of revenue from the Payments sector decreased to 19% from 27% year-over-year, a decline of 8 percentage points[43]. - The geographic split of revenue from Europe remained relatively stable at 24% compared to 25% in the previous year[43]. Financial Position - Total assets as of December 31, 2024, were £980,594,000, a decrease from £1,013,891,000 as of June 30, 2024[35]. - Net cash from operating activities for the six months ended December 31, 2024, was £36,422,000, down from £51,623,000 in the same period of 2023[36]. - Adjusted free cash flow for the six months ended December 31, 2024, was £35,161,000, compared to £49,626,000 in the same period of 2023[40]. - The company reported a total comprehensive loss of £4,715,000 for the six months ended December 31, 2024, compared to a total comprehensive income of £22,582,000 in the same period of 2023[32]. Expenses - Selling, general and administrative expenses for the three months ended December 31, 2024, increased to £6,823,000 from £4,489,000 in 2023, reflecting a 52.0% increase[42]. - Total depreciation and amortisation expenses for the six months ended December 31, 2024, increased to £24,133,000 from £18,761,000 in 2023, representing a 28.5% increase[42]. Employee Metrics - The closing number of total employees as of December 31, 2024, was 11,668, up from 11,539 in 2023, indicating a growth of 1.1%[43]. Capital Allocation - Endava announced a $100 million share repurchase program to optimize capital allocation[2]. Financial Restatement - The company restated its financials to reflect the final acquisition accounting for DEK and Mudbath, impacting the overall financial presentation[44].

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Core Insights - The article discusses the features and benefits of Ian's Insider Corner, an investment group led by Ian Bezek, which provides access to stock initiation reports, market updates, and direct communication with the analyst [1]. Group 1 - Ian Bezek has a decade of experience as a hedge fund analyst and has conducted extensive research in Latin American markets, focusing on countries like Mexico, Colombia, and Chile [2]. - The investment group emphasizes high-quality compounders and growth stocks available at reasonable prices in both the US and other developed markets [2].

Investment Thesis - The analyst reiterates a buy rating for Endava PLC (NYSE: DAVA), expecting growth acceleration as the macroeconomic environment improves [1] Analyst Background - The analyst is an individual investor focused on managing personal capital accumulated over the years [1] - The analyst employs a diversified investment approach, including fundamental investing, technical investing, and momentum investing [1] - The analyst uses Seeking Alpha as a platform to track investment ideas and connect with like-minded investors [1] Disclosure - The analyst has no stock, option, or derivative positions in the mentioned companies and no plans to initiate such positions within the next 72 hours [2] - The article expresses the analyst's personal opinions and is not compensated by any company mentioned [2] - Seeking Alpha's disclosure emphasizes that past performance does not guarantee future results and that the platform is not a licensed securities dealer, broker, or investment adviser [3]

Financial Data and Key Metrics Changes - Endava's revenue for Q1 FY2025 was GBP195.1 million, a 3.5% increase from GBP188.4 million in the same period last year, with a 5.2% increase in constant currency [33] - Profit before tax for the quarter was GBP4.2 million, down from GBP17.3 million year-over-year, while adjusted profit before tax was GBP19.2 million compared to GBP29.8 million in the prior year [34] - Adjusted diluted earnings per share was GBP0.25, down from GBP0.39 in the same period last year [35] Business Line Data and Key Metrics Changes - Revenue from payments declined by 25.5%, accounting for 20% of total revenue, while revenue from banking and capital markets grew by 23.4%, making up 70% of total revenue [37] - Healthcare revenue, reported separately for the first time, grew by 201.6% due to the acquisition of GalaxE, accounting for 12% of total revenue [38] - Revenue from insurance grew by 14.5%, while revenue from TMT and mobility declined by 4.5% and 14.3%, respectively [37] Market Data and Key Metrics Changes - North America accounted for 39% of revenue, with a growth of 32.5% year-over-year, while Europe grew by 2.7% and the UK declined by 8% [36] - The rest of the world saw a significant decline of 42.8%, primarily due to slowdowns in banking and capital markets and insurance verticals [36] Company Strategy and Development Direction - The company is focusing on larger strategic partnerships and has been successful in securing multi-year agreements with clients across various sectors [12][13] - The acquisition of GalaxE is enhancing core modernization capabilities, allowing the company to engage in larger transformation programs [10] - The company is positioning itself to capitalize on the digital shift driven by AI and core modernization, aiming to provide innovative solutions to clients [9][10] Management's Comments on Operating Environment and Future Outlook - Management noted that the market is experiencing a significant digital shift, with new technologies outpacing traditional digital business [8] - The outlook is based on the macroeconomic landscape remaining stable, with clients taking longer to prioritize their spending [46] - The company expects revenue growth acceleration in the second half of the fiscal year, driven by large transformative projects [48] Other Important Information - The company ended the quarter with 11,821 employees, a 0.5% increase from the previous year, focusing on recruitment in high-demand areas like data, AI, and cloud [28] - The company is committed to mental health initiatives and employee well-being, offering support programs and workshops [29] Q&A Session Summary Question: Can you elaborate on the acceleration of new technologies? - Management explained that the digital shift requires deeper transformation of core systems rather than building around them, leading to larger and longer programs [42][44] Question: What are the underlying assumptions in your outlook? - The outlook is based on stable macroeconomic conditions, with clients taking longer to make spending decisions, particularly for larger programs [46][47] Question: How do you see the conversion timelines for larger projects? - Management indicated that conversion times are longer due to the complexity of core systems, but they expect to maintain margin profiles through an accelerator-enabled approach [51][52] Question: What is the sentiment with top clients? - The sentiment is stable among top clients, with some expected growth, although there is a slowdown in media clients due to M&A activity [56] Question: Any updates on GenAI projects moving to production? - There has been a steady increase in projects moving to production, but it remains a small base; contracting is currently on a time and materials basis [59] Question: What is the contribution of the GalaxE acquisition? - The acquisition is expected to contribute 13% to reported revenue for Q2, consistent with Q1 [62]

Core Viewpoint - Endava PLC reported quarterly earnings of $0.33 per share, exceeding the Zacks Consensus Estimate of $0.29 per share, but down from $0.49 per share a year ago, indicating a 32.7% year-over-year decline in earnings [1][2] Financial Performance - The company posted revenues of $253.71 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 2%, and showing a year-over-year increase from $238.57 million [2] - Over the last four quarters, Endava has surpassed consensus EPS estimates two times and topped consensus revenue estimates only once [2] Stock Performance - Endava shares have declined approximately 63.4% since the beginning of the year, contrasting with the S&P 500's gain of 25.8% [3] - The current Zacks Rank for Endava is 3 (Hold), indicating expected performance in line with the market in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $0.33 on revenues of $263.55 million, and for the current fiscal year, it is $1.50 on revenues of $1.07 billion [7] - The trend of estimate revisions for Endava is mixed, which could change following the recent earnings report [6] Industry Context - The Computers - IT Services industry, to which Endava belongs, is currently ranked in the top 16% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]

Core Viewpoint - Rosen Law Firm is reminding investors who purchased Endava plc securities during the specified Class Period of the upcoming lead plaintiff deadline for a class action lawsuit [1] Group 1: Class Action Details - The class action lawsuit has been filed against Endava plc, alleging that during the Class Period, the company made false or misleading statements regarding its business performance and prospects [3] - Key allegations include a decline in demand for Endava's services, delays or cancellations of client projects, and adverse effects on the company's fiscal 2023 and 2024 revenue and earnings [3] - Investors are encouraged to join the class action to seek compensation without any out-of-pocket fees through a contingency fee arrangement [1][3] Group 2: Legal Representation - Rosen Law Firm emphasizes the importance of selecting qualified legal counsel with a proven track record in securities class actions [2] - The firm has achieved significant settlements in the past, including the largest securities class action settlement against a Chinese company and has consistently ranked highly in securities class action settlements [2] - Investors have the option to select their counsel or remain absent from the class action at this stage [4]

Core Viewpoint - The Gross Law Firm has issued a notice to shareholders of Endava plc regarding a class action lawsuit due to allegations of misleading statements and undisclosed information affecting the company's financial performance during a specified period [1][2]. Group 1: Allegations and Class Period - The class period for the lawsuit is from May 23, 2023, to February 28, 2024 [2]. - Allegations include that the company failed to disclose a decline in demand for its services, project delays or cancellations by clients, and the adverse impact on fiscal 2023 and 2024 revenue and earnings [2]. Group 2: Shareholder Actions - Shareholders are encouraged to register for the class action by the deadline of October 25, 2024, to potentially become lead plaintiffs [2]. - Once registered, shareholders will receive updates through a portfolio monitoring software regarding the case's status [2]. Group 3: Law Firm's Mission - The Gross Law Firm aims to protect investors' rights against deceit and fraud, ensuring companies adhere to responsible business practices [3]. - The firm seeks recovery for investors who suffered losses due to misleading statements or omissions that inflated the company's stock price [3].