Endava (DAVA) Q1 2025 earnings summary

Executive summary

• Achieved 3.5% year-over-year revenue growth to £195.1 million, surpassing guidance and driven by North America and healthcare gains from the GalaxE acquisition.

• Business is shifting from traditional digital services to AI and core modernization, with new growth outpacing declines in legacy areas.

• Strategic partnerships and the GalaxE acquisition have expanded capabilities, especially in healthcare and North America, and added proprietary IP.

• Diversified client base and global delivery, including a new presence in India, are driving larger, more complex transformation programs.

• The company leverages a global workforce of 11,821 employees as of September 30, 2024, with a strong presence in Europe, North America, Latin America, APAC, and the Middle East.

Financial highlights

• Q1 FY25 revenue was £195.1 million, up 3.5% year-over-year; profit before tax was £4.2 million, down from £17.3 million; adjusted profit before tax was £19.2 million, down from £29.8 million.

• Adjusted profit before tax margin declined to 9.9% from 15.8% year-over-year; gross margin fell to 24.9% from 28.9%.

• Adjusted diluted EPS was £0.25, down from £0.39 year-over-year; diluted EPS declined to £0.04 from £0.21.

• Adjusted free cash flow was £3.5 million, down from £16.0 million year-over-year; net cash from operating activities was £4.4 million, down from £16.6 million.

• Cash and cash equivalents at quarter-end were £52.8 million; borrowings were £132.6 million.

Outlook and guidance

• Q2 FY25 revenue expected between £195 million and £197 million, representing 8.5%-9.5% constant currency growth year-over-year.

• Q2 adjusted diluted EPS expected between £0.24 and £0.25.

• Full-year FY25 revenue guidance is £800 million-£810 million, with 10%-11.5% constant currency growth.

• Full-year adjusted diluted EPS expected between £1.12 and £1.17.

• Margin improvements anticipated in the second half of the year as GalaxE integration completes and optimization initiatives take effect.