Endava(DAVA)2024-11-13 01:57Financial 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]