Endava (DAVA) AI Stock Analysis

• Market Cap: $293.97M
• Dividend Yield: N/A
• Average Volume (3M): 447.03K
• Price to Earnings (P/E): 25.0
• Beta (1Y): 1.36
• Revenue Growth: 4.02%
• EPS Growth: 34.45%
• Country: US
• Employees: 11,668
• Sector: Technology
• Sector Strength: 88
• Industry: Software - Infrastructure
• EPS (TTM): 0.22
• Shares Outstanding: 40,782,810
• 10 Day Avg. Volume: 455,320
• 30 Day Avg. Volume: 447,028
• PEG Ratio: 1.27
• Price to Book (P/B): 1.12
• Price to Sales (P/S): 0.84
• P/FCF Ratio: 13.57
• Enterprise Value/Market Cap: 1.42
• Enterprise Value/Revenue: 0.56
• Enterprise Value/Gross Profit: 2.40
• Enterprise Value/Ebitda: 7.40
• 1Y Price Target: $8.70
• Price Target Upside: 76.11% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): 1.08
• Revenue Forecast (FY): $997.20M

• Rating: 50 Neutral
• Price Target: $5.00 ▲(1.21% Upside)

The score is primarily held back by deteriorating financial performance (revenue decline, net loss, and sharp margin compression) and clearly bearish technical signals (below key moving averages with negative MACD). Earnings call commentary adds modest support via sequential recovery expectations, strong near-term coverage, and AI traction, but valuation lacks dividend support and the P/E is not compelling relative to the weakened profitability.

Positive Factors

Service-led, diversified delivery model

Endava's core business is recurring, contract-driven professional services across digital engineering, cloud, data, QA and managed services, giving durable revenue streams tied to client digital transformation. This diversified service mix and distributed delivery model supports resilience across industries and long-term client relationships.

Positive operating and free cash flow

Sustained positive operating and free cash flow provides internal funding for strategic investment, platform buildout and shareholder returns. Even with declining trends, positive cash generation bolsters liquidity and funds AI investments and buybacks without immediate dilution, underpinning financial flexibility.

AI-native platform and strategic partnerships

Investments in Dava Flow and formal partnerships (OpenAI, hyperscalers) create a scalable AI-native delivery capability that can raise productivity and expand higher-value engagements. These structural tech and partner assets can differentiate services and enable upsells across payments, fintech and enterprise platforms over time.

Negative Factors

Year-on-year revenue decline

Sustained YoY revenue declines indicate weakening demand in key regions and verticals, reducing operating leverage and headroom for reinvestment. If top-line shrinkage persists, it undermines the economics of time-and-materials delivery and could pressure long-term client expansion and pricing power.

Sharp margin compression and pre-tax loss

Margins have deteriorated materially, driven by higher investment and cost mix changes; compressed gross and EBITDA margins weaken earnings sustainability. Lower margins reduce cash cushion and limit reinvestment capacity, making profitable scaling of new AI offerings and maintaining competitive pricing more challenging.

Rising leverage to fund buybacks and investments

Increasing borrowings to support buybacks and scale AI investments raises leverage and reduces balance-sheet optionality. Higher debt burdens constrain flexibility in economic downturns, increase interest exposure, and may force tougher prioritization between growth investments, working capital and shareholder returns.

Endava Business Overview & Revenue Model

Company Description

Endava 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 Money

Endava generates revenue primarily through its consulting and technology services. The company operates on a project-based revenue model, where it earns fees by delivering bespoke software development and IT consulting solutions tailored to the specific needs of its clients. Key revenue streams include billing for time and materials on projects, fixed-price contracts for specific deliverables, and ongoing managed services agreements. Additionally, Endava has formed partnerships with various technology providers, which may enhance its service offerings and contribute to revenue growth. The company also benefits from a strong client retention rate and recurring revenue from long-term contracts, which provide a stable income base.

Endava Financial Statement Overview

Summary

Overall fundamentals have weakened: TTM revenue is down (-1.84%) and net income turned slightly negative with sharply compressed gross/EBITDA margins. Offsetting this, the balance sheet remains serviceable (debt-to-equity ~0.50) and the company still generates positive operating cash flow and free cash flow, though both are trending down.

Income Statement

Profitability has deteriorated meaningfully: TTM (Trailing-Twelve-Months) revenue declined (-1.84%) and net income turned slightly negative (net margin about -0.4%), versus solid profitability in prior annual periods (e.g., 2023 net margin ~11.8%). Margins have compressed sharply over the last two years (gross margin down from ~33% in 2022–2023 to ~23% TTM; EBITDA margin down from ~17–18% to ~7.6% TTM). The positive offset is that the core operating line remains modestly profitable on an EBIT/EBITDA basis in TTM, suggesting the business is not structurally loss-making, but momentum is clearly weaker.

Balance Sheet

The balance sheet is generally healthy but trending more leveraged. Debt remains below equity (debt-to-equity ~0.50 in TTM), yet leverage has increased versus 2022–2024 levels and is well above the low-leverage profile seen in 2022–2023. Equity remains sizable (stockholders’ equity ~$564M TTM), supporting financial flexibility, but returns on equity are now low (TTM ROE ~1.8%), reflecting the recent earnings compression.

Cash Flow

Cash generation remains a relative strength despite weaker earnings. TTM (Trailing-Twelve-Months) operating cash flow (~$54.7M) and free cash flow (~$40.6M) are positive, providing internal funding capacity. However, free cash flow has declined materially (TTM free cash flow growth -24.9%), and cash conversion has weakened compared with 2022–2023 (when operating cash flow and free cash flow were notably higher). Overall, cash flow is supportive, but the trajectory is negative.

Breakdown	TTM	Jun 2025	Jun 2024	Jun 2023	Jun 2022	Jun 2021
Income Statement
Total Revenue	741.50M	772.25M	740.76M	794.73M	654.76M	446.30M
Gross Profit	173.48M	198.10M	188.81M	264.08M	217.93M	154.18M
EBITDA	56.23M	67.46M	59.57M	142.38M	113.56M	79.19M
Net Income	-2.86M	21.21M	17.12M	94.16M	83.09M	43.45M
Balance Sheet
Total Assets	926.73M	935.77M	1.01B	770.12M	621.86M	473.21M
Cash, Cash Equivalents and Short-Term Investments	68.48M	59.47M	62.54M	164.76M	163.20M	70.45M
Total Debt	281.84M	228.05M	202.76M	69.01M	55.90M	63.69M
Total Liabilities	362.28M	352.83M	374.44M	198.81M	189.13M	172.54M
Stockholders Equity	564.44M	582.94M	639.46M	571.31M	432.72M	300.67M
Cash Flow
Free Cash Flow	40.56M	48.07M	48.91M	110.84M	106.75M	82.24M
Operating Cash Flow	54.72M	52.77M	54.39M	124.52M	120.72M	87.67M
Investing Cash Flow	-17.05M	-9.94M	-290.32M	-110.85M	-23.88M	-106.41M
Financing Cash Flow	-28.65M	-45.13M	135.06M	-11.00M	-5.08M	-11.92M

Endava Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 4.94
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: 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 4.94 is below the 20-day moving average (MA) of 5.73, below the 50-day MA of 6.30, and below the 200-day MA of 10.52, indicating a bearish trend. The MACD of -0.42 indicates Positive momentum. The RSI at 31.83 is Neutral, neither overbought nor oversold. The STOCH value of 24.81 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DAVA.

Endava Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CINT	67 Neutral	$632.21M	17.45	12.24%	―	8.33%	59.54%
CCSI	65 Neutral	$534.75M	6.61	―	―	-0.44%	-7.23%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
BAND	60 Neutral	$396.48M	-36.52	-3.62%	―	7.42%	34.42%
JG	58 Neutral	$45.92M	-94.50	-5.30%	―	20.68%	84.51%
YEXT	56 Neutral	$679.82M	-486.84	16.74%	―	9.46%	―
DAVA	50 Neutral	$293.97M	25.04	-0.61%	―	4.02%	34.45%

Endava Corporate Events

Endava Posts Q2 FY2026 Loss as Revenue Declines Amid Costly AI Pivot and Ongoing Share Buybacks

Endava on February 19, 2026 reported second-quarter fiscal 2026 results for the three months ended December 31, 2025, showing revenue of £184.1 million, down 5.9% year on year and 5.1% at constant currency, but up 3.3% sequentially from Q1. The company swung to a £7.2 million pre-tax loss and a £6.9 million net loss, with diluted EPS at £(0.13) versus £0.11 a year earlier, while adjusted diluted EPS fell to £0.16 from £0.30.

Management attributed recent performance to heavy investment in an AI pivot, including recruitment and training of “NextGen” talent, building an AI-native engagement model through its Dava.Flow platform, and expanding its partner ecosystem. Despite softer top-line and margin pressure, Endava generated £28.2 million of operating cash flow and £20.1 million of adjusted free cash flow, ended the quarter with £68.5 million in cash, and continued returning capital with $121.9 million of share repurchases completed by January 31, 2026, leaving $28.1 million authorized.

Operationally, headcount edged down to 11,385, large-client count slipped to 135 accounts above £1 million, and revenue remained diversified with 40% from North America, 31% from the UK and 23% from Europe. By industry, payments, banking and capital markets, and TMT continued to dominate the mix, and a new mandate to design a cloud-native cross-border payment switch for a PayNet-NETS joint venture highlighted Endava’s depth in the payments vertical and its strategy to build AI-enabled capabilities in high-value financial infrastructure work.

The most recent analyst rating on (DAVA) stock is a Hold with a $5.50 price target. To see the full list of analyst forecasts on Endava stock, see the DAVA Stock Forecast page.

Endava Successfully Concludes 2025 Annual General Meeting

On December 10, 2025, Endava plc held its Annual General Meeting where all proposed resolutions were passed following the board’s recommendations. Key resolutions included the adoption of the 2025 Annual Report, approval of the Directors’ Remuneration Report and Policy, re-appointment of PricewaterhouseCoopers LLP as auditors, and the re-election of several directors. This successful meeting underscores Endava’s stable governance and strategic direction, reinforcing its position in the technology services industry.

The most recent analyst rating on (DAVA) stock is a Hold with a $8.00 price target. To see the full list of analyst forecasts on Endava stock, see the DAVA Stock Forecast page.