Endava (DAVA) Q4 2024 earnings summary

Executive summary

• Q4 FY24 revenue grew 2.4% year-over-year to £194.4M, but FY24 revenue declined 6.8% to £740.8M, mainly due to UK and Payments vertical headwinds; five-year CAGR was 20.5%.

• Adjusted profit before tax margin dropped to 11.2% for FY24 from 20.7% in FY23, with adjusted diluted EPS at £1.12, down from £2.28.

• The client base remained stable with 146 clients generating over £1M in revenue, and headcount was 12,085 globally as of June 30, 2024.

• The business is diversifying industry verticals and geographies, expanding delivery presence, and investing in AI, core modernization, and new technology offerings.

• Acquisition of GalaxE.Solutions expanded North America and healthcare verticals, driving inorganic growth and cross-sell opportunities.

Financial highlights

• Q4 FY24 revenue: £194.4M (+2.4% YoY); FY24 revenue: £740.8M (-6.8% YoY).

• Q4 adjusted PBT: £14.9M (margin 7.7%, down from 20.2% YoY); FY24 adjusted PBT: £83.0M (margin 11.2%, down from 20.7%).

• Q4 adjusted diluted EPS: £0.22 (vs. £0.57 YoY); FY24 adjusted diluted EPS: £1.12 (vs. £2.28 YoY).

• Adjusted free cash flow for FY24: £58.4M (vs. £111.5M YoY); cash and equivalents at period end: £62.4M.

• Borrowings at period end: £144.8M; capital expenditure for FY24: 0.7% of revenue.

Outlook and guidance

• Q1 FY25 revenue expected: £194–195M (4.5–5.0% constant currency YoY growth); adjusted diluted EPS: £0.21–£0.22.

• FY25 revenue expected: £800–810M (10.0–11.5% constant currency YoY growth); adjusted diluted EPS: £1.12–£1.17.

• M&A contributes 13% to Q1 and 11% to FY25 constant currency growth; guidance assumes no significant change in client budgets.

• Margin improvement expected in H2 FY25 as GalaxE integration and investments in technology and people begin to yield returns.

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