Endava (DAVA) Q2 2025 earnings summary

Executive summary

• Demand is shifting from traditional digital transformation to AI-led services, with strong client interest in AI-enabled solutions like Morpheus and Compass, driving a robust pipeline of opportunities.

• Revenue grew 6.6% year-over-year to £195.6 million in Q2 FY2025, with constant currency growth of 9.1%.

• Endava operates globally with 11,668 employees as of Dec 31, 2024, and a presence in 69 cities across 29 countries.

• Recent wins include major deals in banking, capital markets, insurance, healthcare, and energy, with notable client renewals and expansions.

• Client satisfaction remains high, with 92% likely to recommend and 90% likely to repurchase, and headcount grew 1.1% year-over-year, with a focus on AI, data, and cloud skills.

Financial highlights

• Revenue for Q2 FY25 was £195.6M, up 6.6% year-over-year (9.1% in constant currency); six-month revenue was £390.6M.

• Adjusted profit before tax (PBT) was £21.8M (margin 11.2%) for Q2 FY25, and £41.1M (10.5% margin) for the six months ended Dec 31, 2024.

• Adjusted diluted EPS was £0.30 in Q2 FY25, exceeding guidance due to cost management.

• Adjusted free cash flow was £31.6M in Q2 FY25, down from £34M year-over-year; cash and equivalents at £60.1M.

• Capital expenditure was 0.2% of revenue in Q2 FY25, and £1.4M (0.4% of revenue) for the six months ended Dec 31, 2024.

Outlook and guidance

• Q3 FY25 revenue expected at £198M–£200M (13–14% constant currency growth year-over-year); adjusted diluted EPS £0.31–£0.32.

• FY25 revenue guidance is £795M–£800M (8.5–9% constant currency growth); adjusted diluted EPS £1.20–£1.23.

• Guidance reflects recent macroeconomic softness in the UK and Rest of World, with delays and ramp-downs in client projects.