Q3 FY2024
14.3% Year on Year Revenue Decrease to
£174.4 million
11.8% Revenue Decrease at Constant
Currency
Diluted EPS £(0.03) compared to £0.42 in the
prior year comparative period
Adjusted diluted EPS £0.22 compared to £0.59
in the prior year 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 March 31, 2024, the third
quarter of its 2024 fiscal year ("Q3 FY2024").
"Our revenue of £174.4 million for Q3 FY2024 was within our
guidance, representing a decrease of 11.8% in constant currency
year over year. The overall demand environment remains challenging
but stable and we are seeing signs of increasing discretionary
spending. Client behaviour is stabilising but sales cycles remain
elongated,” said John Cotterell, Endava's CEO.
THIRD QUARTER FISCAL YEAR 2024 FINANCIAL HIGHLIGHTS:
- Revenue for Q3 FY2024 was £174.4 million, a decrease of 14.3%
compared to £203.5 million in the same period in the prior
year.
- Revenue decrease at constant currency (a non-IFRS measure)* was
11.8% for Q3 FY2024, compared to growth of 14.6% in the same period
in the prior year.
- Loss before tax for Q3 FY2024 was £(0.5) million, compared to
profit before tax of £30.4 million in the same period in the prior
year.
- Adjusted profit before tax (a non-IFRS measure)* for Q3 FY2024
was £15.5 million, or 8.9% of revenue, compared to £43.4 million,
or 21.3% of revenue, in the same period in the prior year.
- Loss for the period was £(1.7) million, resulting in a diluted
earnings/(loss) per share ("EPS") of £(0.03), compared to profit of
£24.4 million and diluted EPS of £0.42 in the same period in the
prior year.
- Adjusted profit for the period (a non-IFRS measure)* was £12.7
million, resulting in adjusted diluted EPS (a non-IFRS measure)* of
£0.22, compared to adjusted profit for the period of £34.1 million
and adjusted diluted EPS of £0.59 in the same period in the prior
year.
CASH FLOW:
- Net cash from operating activities was £3.0 million in Q3
FY2024, compared to £25.1 million in the same period in the prior
year.
- Adjusted free cash flow (a non-IFRS measure)* was £2.2 million
in Q3 FY2024, compared to £21.2 million in the same period in the
prior year.
- At March 31, 2024, Endava had cash and cash equivalents of
£190.0 million, compared to £164.7 million at June 30, 2023. In
April 2024, Endava used £129.0 million of cash for the acquisition
of GalaxE.
* 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 MARCH 31, 2024:
- Headcount totaled 11,025 at March 31, 2024, with an average of
10,127 operational employees in Q3 FY2024, compared to a headcount
of 11,742 at March 31, 2023 and an average of 10,818 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 142 at March 31, 2024, compared to 155
clients at March 31, 2023.
- Top 10 clients accounted for 34% of revenue in Q3 FY2024,
compared to 33% in the same period in the prior year.
- By geographic region, 30% of revenue was generated in North
America, 28% was generated in Europe, 35% was generated in the
United Kingdom and 7% was generated in the rest of the world in Q3
FY2024. This compares to 32% in North America, 24% in Europe, 38%
in the United Kingdom and 6% in the Rest of the World in the same
period in the prior year.
- By industry vertical, 24% of revenue was generated from
Payments, 14% from Banking and Capital Markets (BCM), 9% from
Insurance, 24% from Technology, Media and Telecommunications (TMT),
10% from Mobility, and 19% from Other in Q3 FY2024. This compares
to 29% from Payments, 16% from BCM, 8% from Insurance, 21% from
TMT, 11% from Mobility, and 15% from Other in the same period in
the prior year.
OUTLOOK:
Fourth Quarter Fiscal Year 2024:
Endava expects revenue will be in the range of £195.0 million to
£197.0 million, representing a constant currency revenue growth of
between 3.5% and 4.5% on a year over year basis. Endava expects
adjusted diluted EPS to be in the range of £0.22 to £0.23 per
share.
Full Fiscal Year 2024:
Endava expects revenue will be in the range of £741.0 million to
£743.0 million, representing a constant currency revenue decrease
of between 4.5% and 4.0% on a year over year basis. Endava expects
adjusted diluted EPS to be in the range of £1.13 to £1.14 per
share.
This above guidance for the fourth quarter and full fiscal year
2024 assumes the exchange rates on April 30, 2024 (when the
exchange rate was 1 British Pound to 1.25 US Dollar and 1.17
Euro).
Endava is not able, at this time, to reconcile its expectations
for the fourth quarter and full fiscal year 2024 for a rate of
revenue decrease 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 (gains)/losses, restructuring costs 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, May
23, 2024, to review its Q3 FY2024 results. To participate in
Endava’s Q3 FY2024 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, June 28, 2024.
ABOUT ENDAVA PLC:
Technology is our how. And people are our why. By combining
world-class engineering, industry expertise and a people-centric
mindset, we consult and partner with our customers to create
technological solutions that drive innovation and transform
businesses. From ideation to production, we support our customers
with tailor-made solutions across various industries and all around
the world.
Endava services clients in Payments, Banking and Capital
Markets, Insurance, TMT, Consumer Products, Retail, Mobility and
Healthcare. As of March 31, 2024, 11,025 Endavans provided services
from our locations in European Union countries (Austria, Bulgaria,
Croatia, Denmark, Germany, Ireland, the Netherlands, Poland,
Romania, Slovenia and Sweden), non-European Union countries (Bosnia
& Herzegovina, Moldova, North Macedonia, Serbia, Switzerland
and the United Kingdom), Latin America (Argentina, Colombia, Mexico
and Uruguay), Asia-Pacific (Australia, Malaysia, Singapore and
Vietnam), North America (Canada and the United States), and the
Middle East (United Arab Emirates).
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 (decrease)/growth rate at constant
currency, adjusted profit before tax, adjusted profit for the
period, adjusted diluted EPS and adjusted free cash flow.
Revenue (decrease)/growth 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 March
31, 2023 were used to convert revenue for the fiscal quarter ended
March 31, 2024 and the revenue for the comparable prior period.
Adjusted profit before tax ("Adjusted PBT") is defined as the
Company’s profit/(loss) 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, restructuring costs and fair value
movement of contingent consideration, all of which are non-cash
items except for the restructuring costs and realised foreign
currency exchange (gains)/ losses.
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).
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 the overall demand environment and client behavior; and
management's financial outlook for the fourth quarter and full
fiscal year 2024. 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 business, results of operations and financial condition
may be negatively impacted by the Russia-Ukraine military conflict
and related sanctions, conflict in the Middle East or if general
economic conditions in Europe, the United States or the global
economy worsen, including increased inflation and potential future
bank failures; the perceived impact and effect of macroeconomic
conditions on Endava and its customers; 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 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; Endava’s ability to successfully identify acquisition
targets, consummate acquisitions and successfully integrate
acquired businesses and personnel; the effects of increased
competition as well as innovations by new and existing competitors
in its market; Endava’s ability to adapt to technological change
and innovate solutions for its clients; Endava’s ability to collect
on billed and unbilled receivables from clients; Endava’s ability
to effectively manage its international operations, including
Endava's exposure to foreign currency exchange rate fluctuations;
Endava’s ability to maintain an effective system of disclosure
controls and internal control over financial reporting; and
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, 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,
2023 filed with the SEC on September 19, 2023 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
Nine Months Ended March
31
Three Months Ended March
31
2024
2023(1)
2024
2023(1)
£’000
£’000
£’000
£’000
REVENUE
546,338
604,942
174,365
203,532
Cost of sales
Direct cost of sales
(389,864
)
(381,711
)
(130,452
)
(132,458
)
Allocated cost of sales
(19,938
)
(18,676
)
(6,720
)
(6,433
)
Total cost of sales
(409,802
)
(400,387
)
(137,172
)
(138,891
)
GROSS PROFIT
136,536
204,555
37,193
64,641
Selling, general and administrative
expenses
(117,643
)
(114,423
)
(39,025
)
(34,537
)
OPERATING PROFIT / (LOSS)
18,893
90,132
(1,832
)
30,104
Net finance income / (expense)
8,496
(905
)
1,303
284
PROFIT / (LOSS) BEFORE TAX
27,389
89,227
(529
)
30,388
Tax on profit on ordinary activities
(8,413
)
(18,122
)
(1,208
)
(6,030
)
PROFIT / (LOSS) FOR THE PERIOD
18,976
71,105
(1,737
)
24,358
OTHER COMPREHENSIVE INCOME
Items that may be reclassified
subsequently to profit or loss:
Exchange differences on translating
foreign operations
(1,061
)
(3,001
)
(2,930
)
(3,824
)
TOTAL COMPREHENSIVE INCOME / (LOSS) FOR
THE PERIOD ATTRIBUTABLE TO OWNERS OF THE PARENT
17,915
68,104
(4,667
)
20,534
EARNINGS PER SHARE (EPS):
Weighted average number of shares
outstanding - Basic
58,213,743
57,176,428
58,439,085
57,603,730
Weighted average number of shares
outstanding - Diluted
58,657,357
58,070,352
58,799,599
58,210,601
Basic EPS (£)
0.33
1.24
(0.03
)
0.42
Diluted EPS (£)
0.32
1.22
(0.03
)
0.42
CONDENSED CONSOLIDATED BALANCE
SHEETS
March 31, 2024
June
30, 2023
March 31, 2023
£’000
£’000
£’000
ASSETS - NON-CURRENT
Goodwill
264,289
240,818
186,946
Intangible assets
57,179
66,216
50,924
Property, plant and equipment
22,204
25,940
26,459
Lease right-of-use assets
52,645
65,084
58,727
Deferred tax assets
19,924
20,156
13,515
Financial assets and other receivables
7,380
5,242
1,992
TOTAL
423,621
423,456
338,563
ASSETS - CURRENT
Trade and other receivables
175,671
177,866
183,533
Corporation tax receivable
2,960
4,042
678
Financial assets
185
56
136
Cash and cash equivalents
190,021
164,703
199,200
TOTAL
368,837
346,667
383,547
TOTAL ASSETS
792,458
770,123
722,110
LIABILITIES - CURRENT
Lease liabilities
14,300
14,573
13,859
Trade and other payables
82,262
91,159
92,649
Corporation tax payable
3,062
5,940
5,569
Contingent consideration
4,619
7,650
3,511
Deferred consideration
3,205
1,267
6,538
TOTAL
107,448
120,589
122,126
LIABILITIES - NON CURRENT
Lease liabilities
42,961
54,441
50,193
Deferred tax liabilities
13,297
14,623
10,152
Contingent consideration
—
3,809
—
Deferred consideration
3,411
4,837
1,363
Other liabilities
548
516
525
TOTAL
60,217
78,226
62,233
EQUITY
Share capital
1,169
1,155
1,153
Share premium
21,208
14,625
13,546
Merger relief reserve
49,643
42,805
39,976
Retained earnings
570,878
522,926
491,739
Other reserves
(18,079
)
(10,176
)
(8,515
)
Investment in own shares
(26
)
(27
)
(148
)
TOTAL
624,793
571,308
537,751
TOTAL LIABILITIES AND EQUITY
792,458
770,123
722,110
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
Nine
Months Ended March 31
Three Months Ended March 31
2024
2023
2024
2023
£’000
£’000
£’000
£’000
OPERATING ACTIVITIES
Profit / (Loss) for the period
18,976
71,105
(1,737
)
24,358
Income tax charge
8,413
18,122
1,208
6,030
Non-cash adjustments
43,760
40,216
11,927
15,242
Tax paid
(7,707
)
(16,189
)
(2,893
)
(6,142
)
Net changes in working capital
(8,811
)
(22,063
)
(5,497
)
(14,428
)
Net cash from operating
activities
54,631
91,191
3,008
25,060
INVESTING ACTIVITIES
Purchase of non-current assets (tangibles
and intangibles)
(3,696
)
(11,804
)
(1,496
)
(4,213
)
Proceeds from disposal of non-current
assets
36
148
63
132
Payment for acquisition of subsidiary, net
of cash acquired
(19,223
)
(35,773
)
(12,513
)
(3,376
)
Other acquisition-related settlements
(6,680
)
—
—
—
Interest received
5,599
1,851
2,077
1,054
Net cash used in investing
activities
(23,964
)
(45,578
)
(11,869
)
(6,403
)
FINANCING ACTIVITIES
Proceeds from sublease
129
325
42
88
Repayment of lease liabilities
(10,793
)
(9,960
)
(3,373
)
(3,469
)
Interest and debt financing costs paid
(1,611
)
(3,532
)
(1,028
)
(3,109
)
Grant received
822
472
592
252
Proceeds from exercise of options
6,586
4,398
3,457
2,132
Net cash used in financing
activities
(4,867
)
(8,297
)
(310
)
(4,106
)
Net change in cash and cash
equivalents
25,800
37,316
(9,171
)
14,551
Cash and cash equivalents at the
beginning of the period
164,703
162,806
198,602
185,323
Exchange differences on cash and cash
equivalents
(482
)
(922
)
590
(674
)
Cash and cash equivalents at the end of
the period
190,021
199,200
190,021
199,200
RECONCILIATION OF IFRS FINANCIAL MEASURES TO NON-IFRS
FINANCIAL MEASURES
RECONCILIATION OF REVENUE
(DECREASE)/GROWTH RATE AS REPORTED UNDER IFRS TO REVENUE GROWTH
RATE AT CONSTANT CURRENCY:
Nine
Months Ended March 31
Three Months Ended March 31
2024
2023
2024
2023
REVENUE (DECREASE) / GROWTH RATE AS
REPORTED UNDER IFRS
(9.7
)%
27.5
%
(14.3
)%
20.3
%
Foreign exchange rates impact
2.7
%
(6.5
)%
2.5
%
(5.7
)%
REVENUE (DECREASE) / GROWTH RATE AT
CONSTANT CURRENCY
(7.0
)%
21.0
%
(11.8
)%
14.6
%
RECONCILIATION OF ADJUSTED PROFIT
BEFORE TAX AND ADJUSTED PROFIT FOR THE PERIOD:
Nine
Months Ended March 31
Three Months Ended March 31
2024
2023
2024
2023
£’000
£’000
£’000
£’000
PROFIT / (LOSS) BEFORE TAX
27,389
89,227
(529
)
30,388
Adjustments:
Share-based compensation expense
29,740
24,135
6,184
8,226
Amortisation of acquired intangible
assets
9,930
9,427
2,845
3,220
Foreign currency exchange (gains) /
losses, net
2,864
10,030
179
2,497
Restructuring costs
7,259
3,683
7,259
2,570
Fair value movement of contingent
consideration
(9,148
)
(10,650
)
(442
)
(3,507
)
Total adjustments
40,645
36,625
16,025
13,006
ADJUSTED PROFIT BEFORE TAX
68,034
125,852
15,496
43,394
PROFIT / (LOSS) BEFORE TAX
18,976
71,105
(1,737
)
24,358
Adjustments:
Adjustments to profit before tax
40,645
36,625
16,025
13,006
Tax impact of adjustments
(6,503
)
(8,299
)
(1,587
)
(3,247
)
ADJUSTED PROFIT FOR THE PERIOD
53,118
99,431
12,701
34,117
RECONCILIATION OF ADJUSTED DILUTED
EARNINGS PER SHARE:
Nine
Months Ended March 31
Three Months Ended March 31
2024
2023
2024
2023
£’000
£’000
£’000
£’000
DILUTED EARNINGS PER SHARE (£)
0.32
1.22
(0.03
)
0.42
Adjustments:
Share-based compensation expense
0.51
0.42
0.11
0.14
Amortisation of acquired intangible
assets
0.17
0.16
0.05
0.06
Foreign currency exchange (gains) /
losses, net
0.05
0.17
—
0.04
Restructuring costs
0.12
0.06
0.12
0.04
Fair value movement of contingent
consideration
(0.15
)
(0.18
)
—
(0.05
)
Tax impact of adjustments
(0.11
)
(0.14
)
(0.03
)
(0.06
)
Total adjustments
0.59
0.49
0.25
0.17
ADJUSTED DILUTED EARNINGS PER SHARE
(£)
0.91
1.71
0.22
0.59
RECONCILIATION OF NET CASH FROM
OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW
Nine
Months Ended March 31
Three Months Ended March 31
2024
2023
2024
2023
£’000
£’000
£’000
£’000
Net cash from operating
activities
54,631
91,191
3,008
25,060
Adjustments:
Grant received
822
472
592
252
Net purchase of non-current assets
(tangible and intangible)
(3,660
)
(11,656
)
(1,433
)
(4,081
)
Adjusted Free cash flow
51,793
80,007
2,167
21,231
SUPPLEMENTARY INFORMATION
SHARE-BASED COMPENSATION
EXPENSE
Nine
Months Ended March 31
Three Months Ended March 31
2024
2023
2024
2023
£’000
£’000
£’000
£’000
Direct cost of sales
21,432
15,996
5,114
5,699
Selling, general and administrative
expenses
8,308
8,139
1,070
2,527
Total
29,740
24,135
6,184
8,226
DEPRECIATION AND AMORTISATION
Nine
Months Ended March 31
Three Months Ended March 31
2024
2023
2024
2023
£’000
£’000
£’000
£’000
Direct cost of sales
14,898
13,242
4,849
4,616
Selling, general and administrative
expenses
12,410
11,406
3,698
3,945
Total
27,308
24,648
8,547
8,561
EMPLOYEES, TOP 10 CUSTOMERS AND REVENUE
SPLIT
Nine
Months Ended March 31
Three Months Ended March 31
2024
2023
2024
2023
Closing number of total employees
(including directors)
11,025
11,742
11,025
11,742
Average operational employees
10,446
10,960
10,127
10,818
Top 10 customers %
34
%
33
%
34
%
33
%
Number of clients with > £1m of
revenue
(rolling 12 months)
142
155
142
155
Geographic split of revenue %
North America
31
%
33
%
30
%
32
%
Europe
26
%
23
%
28
%
24
%
UK
34
%
39
%
35
%
38
%
Rest of World (RoW)
9
%
5
%
7
%
6
%
Industry vertical split of revenue
%
Payments
26
%
29
%
24
%
29
%
Banking and Capital Markets
14
%
16
%
14
%
16
%
Insurance
9
%
7
%
9
%
8
%
TMT
23
%
22
%
24
%
21
%
Mobility
10
%
10
%
10
%
11
%
Other
18
%
16
%
19
%
15
%
FOOTNOTES
(1) The presentation of the income statement has been changed to
no longer separately disclose the net impairment gains/(losses) on
financial assets on the face of the Condensed Consolidated
Statements of Comprehensive Income, but include them within
Selling, general and administrative expenses.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240522714174/en/
INVESTORS: Endava plc Laurence Madsen, Head of Investor
Relations Investors@endava.com
Grafico Azioni Endava (NYSE:DAVA)
Storico
Da Dic 2024 a Gen 2025
Grafico Azioni Endava (NYSE:DAVA)
Storico
Da Gen 2024 a Gen 2025
