Endava (DAVA) Q4 2024 earnings summary

Executive summary

• Q4 FY24 revenue was GBP 194.4 million, up 2.4% year-over-year, but FY24 revenue declined 6.8% to GBP 740.8 million due to macroeconomic headwinds and weakness in the UK and Payments vertical.

• The GalaxE acquisition contributed 15.6% to Q4 revenue, expanding North America and healthcare, and enabling cross-sell and India delivery.

• The business is diversifying industry verticals and geographies, investing in AI, core modernization, and global delivery capabilities.

• AI-driven projects and proprietary solutions like Morpheus are gaining traction, but sales cycles remain elongated due to client caution and complex engineering requirements.

• Workforce totaled 12,085 globally as of June 30, 2024, nearly flat year-over-year.

Financial highlights

• Q4 FY24 adjusted profit before tax (PBT) was GBP 14.9 million (7.7% margin), down from GBP 38.3 million (20.2%) year-over-year.

• FY24 adjusted PBT was GBP 83.0 million (11.2% margin), down from GBP 164.2 million (20.7%) in FY23.

• Adjusted diluted EPS for Q4 FY24 was GBP 0.22, down from GBP 0.57; FY24 was GBP 1.12, down from GBP 2.28.

• Adjusted free cash flow for FY24 was GBP 58.4 million, down from GBP 111.5 million in FY23.

• Cash and cash equivalents at June 30, 2024, were GBP 62.4 million, with borrowings of GBP 144.8 million.

Outlook and guidance

• Q1 FY25 revenue expected between GBP 194–195 million, representing 4.5–5.0% constant currency growth year-over-year.

• FY25 revenue guidance is GBP 800–810 million, up 10.0–11.5% in constant currency, with M&A contributing 11%.

• Adjusted diluted EPS for FY25 expected in the range of 112–117 pence per share.

• Margin improvement expected in the second half of FY25 as investments in people, technology, and GalaxE integration taper.

• Forward-looking statements highlight risks from macroeconomic conditions, geopolitical conflicts, and industry trends.