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Endava (DAVA)
:DAVA
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Endava
(NYSE:DAVA)
59Neutral
Positive Factors
Deal Pipeline
DAVA now has 24 large deals in the pipeline, primarily core modernization projects, compared to 21 last quarter, as 9 new ones entered the mix, while 5 were won and 1 was paused.
Earnings
Endava reported fiscal third-quarter results that beat Street estimates on EPS, thanks to higher-than-expected adjusted gross margins and disciplined cost controls in SG&A.
Long-term Potential
DAVA's high-quality engineering capabilities equip the company with the appropriate skills to benefit from an eventual cyclical recovery in discretionary demand.
Negative Factors
Market Sentiment
Investors are expected to find more attractive alternatives as peers demonstrate more stability and consistent growth recovery.
Revenue Guidance
Endava provided fourth-quarter guidance that was below consensus for revenue and EPS, sending shares down over 25% in midday trading.
Sector Challenges
Pressure continues across key sectors like Healthcare, Auto/Mobility, and Banking & Capital Markets, overshadowing Endava's innovative offerings.
Endava (DAVA) vs. S&P 500 (SPY)
Market Cap
$923.25M
Dividend YieldN/A
Average Volume (3M)770.67K
Price to Earnings (P/E)37.9
Beta (1Y)1.50
Revenue Growth7.58%
EPS Growth-57.13%
CountryUS
Employees11,668
SectorTechnology
Sector Strength82
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)0.45
Shares Outstanding42,433,780
10 Day Avg. Volume1,268,416
30 Day Avg. Volume770,666
Financial Highlights & Ratios
PEG Ratio-7.66
Price to Book (P/B)1.23
Price to Sales (P/S)0.00
P/FCF Ratio23.43
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$20.50Price Target Upside38.70% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Endava Business Overview & Revenue Model
Company DescriptionEndava plc provides technology services for clients in the consumer products, healthcare, mobility, and retail verticals in Europe, Latin America, North America, and internationally. The company offers technology and digital advisory services for payments and financial services, and TMT sectors; IT strategies; business analysis services; program management services; digital product strategy services; and architecture, extended reality, machine learning and artificial intelligence, product design, and user experience and visual design services. It also engages in the identifying, defining, and embedding collaborative data and analytics; and provision of automated testing, cloud native software engineering, continuous delivery, distributed agile delivery, intelligent automation, secure development, agile applications management, cloud infrastructure, DevSecOps, service delivery, smart desk, and telemetry and monitoring services. The company was founded in 2000 and is headquartered in London, the United Kingdom.
How the Company Makes MoneyEndava makes money through a combination of project-based and managed services contracts. Its revenue streams primarily include fees from software development, consulting, and IT services, which are often structured as time and materials or fixed-price contracts. The company benefits from long-term partnerships with clients, which contribute to recurring revenue and stability. Additionally, Endava's strategic focus on high-growth sectors and investment in emerging technologies helps to drive demand for its services.
Endava Financial Statement Overview
Summary
Endava demonstrates strong financial fundamentals with consistent revenue growth and operational efficiency. However, declining net profit margins and ROE in the TTM indicate potential challenges in profitability. The company has a solid balance sheet with low leverage, supporting long-term financial stability. Effective cash flow management continues to be a strength, though negative investing cash flows could pose future risks.Income Statement
Endava's income statement shows solid performance with a TTM gross profit margin of 22.91% and an EBIT margin of 0.76%. There is a notable decline in net profit margin to 0.72% in the TTM, compared to 2.31% in the previous annual period. Revenue growth has slowed slightly in the TTM with only a 2.52% increase compared to the previous period. Despite the decline in profitability margins, the company maintains a positive EBITDA margin of 3.61%, indicating operational stability.72
Positive
Balance Sheet
The balance sheet shows a moderate debt-to-equity ratio of 0.27, reflecting prudent leverage management. The equity ratio stands at 66.78%, suggesting a strong capital structure with substantial equity backing. However, the return on equity (ROE) has decreased to 0.84% in the TTM, indicating a drop in profitability efficiency relative to equity. Overall, the company maintains a solid financial position with a focus on equity financing.65
Positive
Cash Flow
Endava's cash flow statement features a decrease in operating cash flow to net income ratio to 7.12 in the TTM, showing robust cash generation relative to net income. The free cash flow to net income ratio is 6.24, indicating effective cash flow management despite a decline in free cash flow growth. The ongoing challenge is the negative trend in investing cash flows, reflecting potential risks in investment activities.68
Positive
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 759.42M | 740.76M | 794.73M | 654.76M | 446.30M | 350.95M | Gross Profit |
| 174.04M | 179.71M | 264.08M | 217.93M | 153.83M | 100.15M | EBIT |
| 5.78M | 20.14M | 112.84M | 67.89M | 38.40M | 932.00K | EBITDA |
| 27.43M | 72.19M | 150.77M | 96.86M | 81.27M | 19.66M | Net Income Common Stockholders |
| 5.51M | 17.12M | 94.16M | 83.09M | 43.45M | 19.99M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 60.18M | 62.54M | 164.76M | 163.20M | 70.45M | 101.91M | Total Assets |
| 980.59M | 1.01B | 770.12M | 621.86M | 473.21M | 360.94M | Total Debt |
| 175.84M | 202.76M | 69.01M | 55.90M | 63.69M | 53.37M | Net Debt |
| 115.77M | 140.40M | -95.69M | -106.91M | -6.20M | -47.96M | Total Liabilities |
| 325.88M | 374.44M | 198.81M | 189.13M | 172.54M | 124.62M | Stockholders Equity |
| 654.72M | 639.46M | 571.31M | 432.72M | 300.67M | 236.33M |
| Cash Flow | Free Cash Flow | ||||
| 34.33M | 48.91M | 110.84M | 106.75M | 82.24M | 30.36M | Operating Cash Flow |
| 39.19M | 54.39M | 124.52M | 120.72M | 88.35M | 40.24M | Investing Cash Flow |
| -284.94M | -290.32M | -110.85M | -23.88M | -107.09M | -29.75M | Financing Cash Flow |
| 107.68M | 135.06M | -11.00M | -5.08M | -11.92M | 20.88M |
Endava Technical Analysis
Negative
14.78
Price Trends
19.41
Negative
24.97
Negative
26.57
Negative
Market Momentum
-0.43
Positive
31.81
Neutral
36.97
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DAVA, the sentiment is Negative. The current price of 14.78 is below the 20-day moving average (MA) of 18.44, below the 50-day MA of 19.41, and below the 200-day MA of 26.57, indicating a bearish trend. The MACD of -0.43 indicates Positive momentum. The RSI at 31.81 is Neutral, neither overbought nor oversold. The STOCH value of 36.97 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DAVA.
Endava Risk Analysis
Endava disclosed 75 risk factors in its most recent earnings report. Endava reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Endava Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $836.38M | 27.79 | 11.18% | ― | 2.07% | 22.81% | |
73 Outperform | $1.29B | 26.91 | 24.36% | 1.34% | 4.90% | 9.91% | |
72 Outperform | $1.12B | 18.56 | 6.35% | ― | -0.13% | 263.78% | |
72 Outperform | $1.03B | 89.55 | 3.78% | ― | 9.54% | ― | |
67 Neutral | $1.65B | ― | -21.26% | ― | -1.55% | -250.10% | |
60 Neutral | $11.64B | 10.63 | -6.94% | 2.93% | 7.63% | -11.15% | |
59 Neutral | $923.25M | 37.88 | 2.85% | ― | 7.58% | -57.13% |
* Technology Sector Average
Performance Comparison
DAVA
Endava
14.78
-15.53
-51.24%
NTCT
Netscout Systems
23.15
2.21
10.55%
RDWR
Radware
23.68
3.31
16.25%
VRNT
Verint Systems
18.09
-13.83
-43.33%
ATEN
A10 Networks
17.51
1.63
10.26%
CINT
CI&T
6.44
3.06
90.53%
Endava Earnings Call Summary
Earnings Call Date:May 14, 2025
(Q3-2025)
| % Change Since: -30.97%|
Next Earnings Date:Sep 30, 2025
Earnings Call Sentiment Neutral
Endava reported revenue growth and profitability improvements, along with significant strategic partnerships. However, economic headwinds, currency impacts, and client caution have delayed deal conversions and affected guidance, resulting in a cautious outlook.Q3-2025 Updates
Positive Updates
Record Revenue Growth
Endava's revenue totaled £194.8 million for the quarter ended March 31, 2025, representing an 11.7% increase from the prior year.
Significant Partnerships and Innovations
Endava announced partnerships with Open AI, Google, AlixPartners, and others, contributing to deal flow and delivering innovative AI-driven solutions for clients.
Increased Share Buyback Authorization
Endava increased its share buyback authorization by an additional $50 million, optimizing capital allocation.
Strong Client and Industry Engagement
Endava's work with clients in AI, payments, and banking sectors, showcasing significant engagements in modernizing systems and transforming operations.
Profitability Improvement
Profit before tax for the quarter was £13.6 million compared to a loss in the same period last year, with adjusted PBT margin rising to 12.6% from 8.9%.
Negative Updates
Slowing Growth Due to Economic Factors
The weakening of the U.S. dollar and delayed deals in North America and Asia Pacific impacted growth, with revenue falling short of guidance.
Challenges in North America
Despite strong growth, North America faced conversion slowdowns in the opportunity pipeline, especially in mobility and healthcare sectors.
Guidance Reflects Cautious Outlook
Q4 revenue guidance indicates potential negative growth, with a range of £186 million to £188 million, reflecting ongoing challenges.
Client Caution and Delayed Large Deals
Endava faced delays in closing large deals due to client caution and external factors, impacting expected revenue growth.
Company Guidance
During Endava's third quarter fiscal year 2025 conference call, the company provided detailed guidance for the upcoming quarter and fiscal year. For Q4 fiscal year 2025, Endava expects revenue to range between £186 million and £188 million, with a constant currency revenue change of between -1.0% and 0% year-over-year. Adjusted diluted EPS is anticipated to be between 22 pence and 24 pence per share. For the full fiscal year 2025, the company projects revenue between £771.5 million and £773.5 million, representing a 6.0% to 6.5% increase on a constant currency basis. Adjusted diluted EPS for the year is expected to be between 111 pence and 113 pence per share. Endava's guidance considers significant currency headwinds, particularly the weakening of the U.S. dollar, which has impacted revenue projections. The company also noted challenges in signing large deals due to client caution in the current macroeconomic environment, especially in North America and the healthcare and mobility sectors, while Europe performed as expected. Despite these challenges, Endava is focusing on increasing its share buyback authorization by an additional $50 million and enhancing partnerships to improve long-term growth and client engagement.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.