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Endava Ltd (DAVA)
NYSE:DAVA
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Endava
(NYSE:DAVA)
Rating:64Neutral
Price Target:
$16.00
▲(19.31% Upside)
Positive Factors
Cost Management
EPS of £0.34 beat the £0.31 consensus thanks to higher-than-expected adjusted gross margins and disciplined cost controls in SG&A.
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 Performance
Endava reported fiscal third-quarter results that beat Street estimates on EPS but missed on revenue.
Negative Factors
Financial Outlook
DAVA provided fourth-quarter guidance that was below consensus for revenue and EPS, sending shares down over 25% in midday trading.
Market Competition
Investors are likely to find more attractive alternatives as peers demonstrate more stability and consistent growth recovery.
Revenue Growth
There is limited potential for revenue growth recovery and earnings expansion in the near future.
Endava (DAVA) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$791.61M
Dividend YieldN/A
Average Volume (3M)662.14K
Price to Earnings (P/E)34.4
Beta (1Y)1.31
Revenue Growth7.58%
EPS Growth-57.13%
CountryUS
Employees11,668
SectorTechnology
Sector Strength94
IndustrySoftware - Infrastructure
Share Statistics
EPS (TTM)0.46
Shares Outstanding42,433,780
10 Day Avg. Volume808,354
30 Day Avg. Volume662,136
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)0.00
Price to Sales (P/S)0.00
P/FCF Ratio0.00
Enterprise Value/Market Cap1.66
Enterprise Value/Revenue1.68
Enterprise Value/Gross Profit6.88
Enterprise Value/Ebitda35.27
Forecast
1Y Price Target
$21.17Price Target Upside57.87% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering7
Endava Business Overview & Revenue Model
Company DescriptionEndava (DAVA) is a leading technology company that specializes in delivering next-generation technology services. Operating across multiple sectors including finance, insurance, telecommunications, media, technology, and retail, Endava focuses on helping its clients accelerate their digital transformation. The company offers a range of services including agile transformation, digital evolution, and automation solutions, leveraging a combination of industry-specific knowledge and innovative technologies.
How the Company Makes MoneyEndava makes money through a diversified revenue model primarily driven by providing technology and consulting services. Key revenue streams include digital strategy consulting, software development, and IT services which are tailored to meet the needs of various industries. The company capitalizes on long-term partnerships with clients, which often leads to repeat business and sustained revenue. Additionally, Endava's focus on delivering high-quality services through nearshore and offshore delivery centers contributes to cost efficiency and competitive pricing, further enhancing its earning potential.
Endava Earnings Call Summary
Earnings Call Date:May 14, 2025
(Q3-2025)
| % Change Since: -37.37%|
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.Endava Financial Statement Overview
Summary
Endava demonstrates solid financial health with strong equity and cash flow positions. While revenue growth is steady, operational efficiency has decreased, impacting profitability margins. The balance sheet is strong, with low leverage and high equity, offering stability. However, the company faces challenges in maintaining profit margins and ROE, which could impact future growth.Income Statement
Endava's TTM (Trailing-Twelve-Months) revenue growth is moderate with a 5.28% increase compared to the previous annual period. The gross profit margin for the TTM is 24.42%, indicating effective cost management. However, the net profit margin is relatively low at 2.33%, and there is a decline in EBIT and EBITDA margins compared to past years, signaling reduced operational efficiency.75
Positive
Balance Sheet
The company maintains a strong equity position with an equity ratio of 67.14% as of the latest TTM. The debt-to-equity ratio stands at 0.29, indicating low leverage and financial stability. However, the return on equity has declined, reflecting reduced profitability relative to equity.80
Positive
Cash Flow
Endava's cash flow statements show a robust free cash flow generation with a slight growth rate of 2.48%, supporting its operational requirements. The operating cash flow to net income ratio is strong at 3.02, indicating high cash generation relative to net income. However, the free cash flow to net income ratio is 2.76, which suggests a slight decline in conversion efficiency.70
Positive
| Breakdown | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 740.76M | 794.73M | 654.76M | 446.30M | 350.95M |
| Gross Profit | 179.71M | 264.08M | 217.93M | 153.83M | 100.15M |
| EBITDA | 72.19M | 150.77M | 96.86M | 81.27M | 19.66M |
| Net Income | 17.12M | 94.16M | 83.09M | 43.45M | 19.99M |
Balance Sheet | |||||
| Total Assets | 1.01B | 770.12M | 621.86M | 473.21M | 360.94M |
| Cash, Cash Equivalents and Short-Term Investments | 62.54M | 164.76M | 163.20M | 70.45M | 101.91M |
| Total Debt | 202.76M | 69.01M | 55.90M | 63.69M | 53.37M |
| Total Liabilities | 374.44M | 198.81M | 189.13M | 172.54M | 124.62M |
| Stockholders Equity | 639.46M | 571.31M | 432.72M | 300.67M | 236.33M |
Cash Flow | |||||
| Free Cash Flow | 48.91M | 110.84M | 106.75M | 82.24M | 30.36M |
| Operating Cash Flow | 54.39M | 124.52M | 120.72M | 88.35M | 40.24M |
| Investing Cash Flow | -290.32M | -110.85M | -23.88M | -107.09M | -29.75M |
| Financing Cash Flow | 135.06M | -11.00M | -5.08M | -11.92M | 20.88M |
Endava Technical Analysis
Neutral
13.41
Price Trends
14.34
Negative
16.06
Negative
22.22
Negative
Market Momentum
-0.45
Negative
49.60
Neutral
73.45
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DAVA, the sentiment is Neutral. The current price of 13.41 is above the 20-day moving average (MA) of 13.29, below the 50-day MA of 14.34, and below the 200-day MA of 22.22, indicating a neutral trend. The MACD of -0.45 indicates Negative momentum. The RSI at 49.60 is Neutral, neither overbought nor oversold. The STOCH value of 73.45 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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 (61)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $1.25B | 25.37 | 24.39% | 1.38% | 11.04% | 18.70% | |
71 Outperform | $1.61B | 22.38 | 4.88% | ― | 5.29% | ― | |
70 Neutral | $719.43M | 21.94 | 11.27% | ― | 5.76% | 28.93% | |
69 Neutral | $1.19B | 25.47 | 5.32% | ― | -2.09% | 76.96% | |
64 Neutral | $791.61M | 34.37 | 2.85% | ― | 7.58% | -57.13% | |
64 Neutral | $1.03B | 75.42 | 4.46% | ― | 11.51% | ― | |
61 Neutral | $36.30B | 7.26 | -7.27% | 1.97% | 7.74% | -7.92% |
* Technology Sector Average
Performance Comparison
DAVA
Endava
12.59
-17.13
-57.64%
NTCT
Netscout Systems
22.39
2.66
13.48%
RDWR
Radware
24.68
2.48
11.17%
VRNT
Verint Systems
19.49
-13.31
-40.58%
ATEN
A10 Networks
17.36
4.34
33.33%
CINT
CI&T
5.39
-1.83
-25.35%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.