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
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241111209025/en/
INVESTOR CONTACT: Endava plc Laurence Madsen, Head of
Investor Relations Investors@endava.com
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