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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Endava plc | NYSE:DAVA | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
-1.25 | -4.12% | 29.06 | 30.26 | 28.94 | 30.12 | 879,299 | 01:00:00 |
Q4 FY2023 5.2% Year on Year Revenue Growth to £189.8 million 4.8% Revenue Growth at Constant Currency IFRS diluted EPS £0.40 compared to £0.47 in the prior year comparative period Adjusted diluted EPS £0.57 compared to £0.51 in the prior year comparative period
FY2023 21.4% Year on Year Revenue Growth to £794.7 million 16.6% Revenue Growth at Constant Currency IFRS diluted EPS £1.62 compared to £1.43 in the prior year comparative period Adjusted diluted EPS £2.28 compared to £1.93 in the prior year comparative period
Endava plc (NYSE: DAVA) ("Endava" or the "Company"), a global provider of digital transformation, agile development and intelligent automation services, today announced results for the three months ended June 30, 2023, the fourth quarter of its 2023 fiscal year ("Q4 FY2023"), and for the fiscal year ended June 30, 2023 ("FY2023").
"Demand from new and existing clients continued to drive revenue growth in the quarter and for the fiscal year, leading to a revenue increase of 4.8% in constant currency for Q4 FY2023 and 16.6% in FY2023. While we continue to see clients delay new projects due to the uncertain macroeconomic environment, we see high levels of sales activity as clients are once again prioritizing digital transformation projects,” said John Cotterell, Endava's CEO.
FOURTH QUARTER FISCAL YEAR 2023 FINANCIAL HIGHLIGHTS:
FISCAL YEAR 2023 FINANCIAL HIGHLIGHTS:
CASH FLOW:
* Definitions of the non-IFRS measures used by the Company and a reconciliation of such measures to the related IFRS financial measure can be found under the sections below titled “Non-IFRS Financial Information” and “Reconciliation of IFRS Financial Measures to Non-IFRS Financial Measures.”
OTHER METRICS FOR THE QUARTER ENDED JUNE 30, 2023:
OTHER METRICS FOR THE FISCAL YEAR ENDED JUNE 30, 2023:
OUTLOOK:
First Quarter Fiscal Year 2024:
Endava expects revenues will be in the range of £186.0 million to £187.0 million, representing constant currency revenue decline between (2.0)% and (1.0)%. Endava expects adjusted diluted EPS to be in the range of £0.34 to £0.35 per share.
Full Fiscal Year 2024:
Endava expects revenues will be in the range of £780.0 million to £795.0 million, representing constant currency growth between 1.0% and 3.0%. Endava expects adjusted diluted EPS to be in the range of £1.52 to £1.62 per share.
This above guidance for the first quarter and full fiscal year 2024 assumes the exchange rates on August 31, 2023 (when the exchange rate was 1 British Pound to 1.27 US Dollar and 1.16 Euro).
Endava is not able, at this time, to reconcile its expectations for the first quarter and full fiscal year 2024 for revenue growth rate at constant currency or adjusted diluted EPS, to their most directly comparable IFRS measures as a result of the uncertainty regarding, and the potential variability of, reconciling items such as share-based compensation expense, amortisation of acquired intangible assets, foreign currency exchange (gains)/losses, restructuring costs and fair value movement of contingent consideration, as applicable. Accordingly, reconciliation is not available without unreasonable effort, although it is important to note that these factors could be material to Endava's results computed in accordance with IFRS.
The guidance provided above is forward-looking in nature. Actual results may differ materially. See “Forward-Looking Statements” below.
RECENT BUSINESS HIGHLIGHTS:
On June 9, 2023, Endava announced the acquisition of DEK Corporation Pty Ltd, DEK Technologies Sweden AB and DEK Vietnam Company Ltd, a multinational firm that develops cutting-edge software solutions across a range of applications, including embedded systems, real-time solutions, telecoms and data communications.
On August 3, 2023, Endava announced the acquisition of TLM Partners, Inc. ("TLM"). TLM provides outsourced development services across design, engineering and art/animation for PC and console video games and other digital entertainment. TLM has particular expertise in highly complex areas of cross-play, middleware, physics, engine-level tools and technical art.
CONFERENCE CALL DETAILS:
The Company will host a conference call at 8:00 am ET today, September 19, 2023, to review its Q4 FY2023 & FY2023 results. To participate in Endava’s Q4 FY2023 & FY2023 earnings conference call, please dial in at least five minutes prior to the scheduled start time (866) 652-5200 or (412) 317-6060 for international participants, Conference ID: Endava Call.
Investors may listen to the call on Endava’s Investor Relations website at http://investors.Endava.com. The webcast will be recorded and available for replay until Tuesday, October 17, 2023.
ABOUT ENDAVA PLC:
Endava is reimagining the relationship between people and technology. By leveraging next-generation technologies, its agile and multi-disciplinary teams provide a combination of product & technology strategies, intelligent experiences, and world class engineering to help clients become digital, experience-driven businesses by assisting them in their journey from idea generation to development and deployment of products, platforms and solutions. Endava collaborates with its clients, seamlessly integrating with their teams, catalysing ideation and delivering robust solutions.
Endava services clients in Payments and Financial Services, TMT, Consumer Products, Retail, Mobility and Healthcare. As of June 30, 2023, 12,063 Endavans provided services from our locations in European Union countries (Austria, Bulgaria, Croatia, Denmark, Germany, Ireland, the Netherlands, Poland, Romania, Slovenia and Sweden), non-European Union countries (Bosnia & Herzegovina, Moldova, North Macedonia, Serbia, Switzerland and the United Kingdom), Latin America (Argentina, Colombia, Mexico and Uruguay), Asia-Pacific (Australia, Malaysia, Singapore and Vietnam), North America (Canada and the United States), and the Middle East (United Arab Emirates).
NON-IFRS FINANCIAL INFORMATION:
To supplement Endava’s Consolidated Statements of Comprehensive Income, Consolidated Balance Sheets and Consolidated Statements of Cash Flows presented in accordance with IFRS, the Company uses non-IFRS measures of certain components of financial performance in the press release. These measures include: revenue growth rate at constant currency, adjusted profit before tax, adjusted profit for the period, adjusted diluted EPS and adjusted free cash flow.
Revenue growth rate at constant currency is calculated by translating revenue from entities reporting in foreign currencies into British Pounds using the comparable foreign currency exchange rates from the prior period. For example, the average currency rates in effect for the fiscal quarter ended June 30, 2022 were used to convert revenue for the fiscal quarter ended June 30, 2023 and the revenue for the comparable prior period.
Adjusted profit before tax ("Adjusted PBT") is defined as the Company’s profit before tax adjusted to exclude the impact of share-based compensation expense, amortisation of acquired intangible assets, realised and unrealised foreign currency exchange (gains)/losses, restructuring costs and fair value movement of contingent consideration, all of which are non-cash items except for the restructuring costs and realised foreign currency exchange (gains)/losses. Adjusted PBT margin is Adjusted PBT as a percentage of total revenue.
Adjusted profit for the period is defined as Adjusted PBT together with the tax impact of these adjustments.
Adjusted diluted EPS is defined as Adjusted profit for the period, divided by weighted average number of shares outstanding - diluted.
Adjusted free cash flow is the Company’s net cash from operating activities, plus grants received, less net purchases of non-current assets (tangible and intangible).
Management believes these measures help illustrate underlying trends in the Company's business and uses the measures to establish budgets and operational goals, communicated internally and externally, for managing the Company's business and evaluating its performance. Management also believes the presentation of its non-IFRS financial measures enhances an investor’s overall understanding of the Company’s historical financial performance. The presentation of the Company’s non-IFRS financial measures is not meant to be considered in isolation or as a substitute for the Company’s financial results prepared in accordance with IFRS, and its non-IFRS measures may be different from non-IFRS measures used by other companies. Investors should review the reconciliation of the Company’s non-IFRS financial measures to the comparable IFRS financial measures included below, and not rely on any single financial measure to evaluate the Company’s business.
U.K. STATUTORY ACCOUNTS:
The financial information set out in this press release does not constitute the Company's statutory accounts as defined in section 434 of the Companies Act 2006 for the years ended June 30, 2023 or June 30, 2022. Statutory accounts for the year ended June 30, 2022 have been delivered to the Registrar of Companies and statutory accounts for the year ended June 30, 2023 will be delivered to the Registrar of Companies after the Annual General Meeting of the Company to be held in 2023. The auditor has reported on the statutory accounts for the year ended June 30, 2022; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.
FORWARD-LOOKING STATEMENTS:
This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by the use of terms and phrases such as “believe,” “expect,” "outlook," “may,” “will,” and other similar terms and phrases. Such forward-looking statements include, but are not limited to, the statements regarding Endava’s projected financial performance for the first fiscal quarter of fiscal year 2024 and the full fiscal year 2024; expectations of increased current and prospective client demand for Endava offerings in upcoming periods and resulting impact on revenue; and Endava’s ability to achieve its anticipated growth. Forward-looking statements involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the results anticipated by these forward-looking statements, including, but not limited to: Endava’s business, results of operations and financial condition may be negatively impacted by the Russia-Ukraine military conflict and related sanctions or if general economic conditions in Europe, the United States or the global economy continue to worsen, including increased inflation and recent and potential future bank failures; Endava’s ability to retain existing clients and attract new clients, including its ability to increase revenue from existing clients and diversify its revenue concentration; Endava’s ability to attract and retain highly-skilled IT professionals at cost-effective rates; Endava's ability to penetrate new industry verticals and geographies and grow its revenue in current industry verticals and geographies; Endava’s ability to maintain favorable pricing and utilization rates; Endava’s ability to successfully identify acquisition targets, consummate acquisitions and successfully integrate acquired businesses and personnel; the effects of increased competition as well as innovations by new and existing competitors in its market; Endava’s ability to adapt to technological change and innovate solutions for its clients; Endava’s ability to collect on billed and unbilled receivables from clients; Endava’s ability to effectively manage its international operations, including Endava's exposure to foreign currency exchange rate fluctuations; Endava’s ability to maintain an effective system of disclosure controls and internal control over financial reporting; and Endava’s future financial performance, including trends in revenue, cost of sales, gross profit, selling, general and administrative expenses, finance income and expense and taxes, as well as other risks and uncertainties discussed in the “Risk Factors” section of Endava's Annual Report for the year ended June 30, 2023 filed with the SEC on September 19, 2023 and in other filings that Endava makes from time to time with the SEC. In addition, the forward-looking statements included in this press release represent Endava’s views and expectations as of the date hereof and are based on information currently available to Endava. Endava anticipates that subsequent events and developments may cause its views to change. Endava specifically disclaims any obligation to update the forward-looking statements in this press release except as required by law. These forward-looking statements should not be relied upon as representing Endava’s views as of any date subsequent to the date hereof.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Twelve Months Ended
June 30
Three Months Ended
June 30
2023
2022
2023
2022
£’000
£’000
£’000
£’000
REVENUE
794,733
654,757
189,791
180,404
Cost of sales
Direct cost of sales
(505,679)
(414,411)
(123,968)
(117,027)
Allocated cost of sales
(24,977)
(22,415)
(6,301)
(5,618)
Total cost of sales
(530,656)
(436,826)
(130,269)
(122,645)
GROSS PROFIT
264,077
217,931
59,522
57,759
Selling, general and administrative expenses
(150,300)
(121,808)
(36,142)
(32,195)
Net impairment (losses) / gains on financial assets
(932)
(739)
(667)
1,087
OPERATING PROFIT
112,845
95,384
22,713
26,651
Net finance income
1,318
6,995
2,223
5,840
PROFIT BEFORE TAX
114,163
102,379
24,936
32,491
Tax on profit on ordinary activities
(20,000)
(19,286)
(1,878)
(5,452)
PROFIT FOR THE PERIOD
94,163
83,093
23,058
27,039
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations
(9,999)
6,580
(6,998)
5,392
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO OWNERS OF THE PARENT
84,164
89,673
16,060
32,431
EARNINGS PER SHARE (EPS):
Weighted average number of shares outstanding - Basic
57,314,839
56,272,036
57,730,072
56,680,204
Weighted average number of shares outstanding - Diluted
58,082,388
58,018,200
58,092,245
57,974,389
Basic EPS (£)
1.64
1.48
0.40
0.48
Diluted EPS (£)
1.62
1.43
0.40
0.47
CONSOLIDATED BALANCE SHEETS
June 30, 2023
June 30, 2022
£’000
£’000
ASSETS - NON-CURRENT
Goodwill
240,818
145,916
Intangible assets
66,216
56,189
Property, plant and equipment
25,940
21,260
Lease right-of-use assets
65,084
50,818
Deferred tax assets
20,156
17,218
Financial assets and other receivables
5,242
2,276
TOTAL
423,456
293,677
ASSETS - CURRENT
Trade and other receivables
177,866
162,671
Corporation tax receivable
4,042
2,309
Financial assets
56
392
Cash and cash equivalents
164,703
162,806
TOTAL
346,667
328,178
TOTAL ASSETS
770,123
621,855
LIABILITIES - CURRENT
Lease liabilities
14,573
11,898
Trade and other payables
91,159
98,252
Corporation tax payable
5,940
3,477
Contingent consideration
7,650
4,183
Deferred consideration
1,267
10,604
TOTAL
120,589
128,414
LIABILITIES - NON CURRENT
Lease liabilities
54,441
43,999
Deferred tax liabilities
14,623
10,826
Contingent consideration
3,809
4,331
Deferred consideration
4,837
1,062
Other liabilities
516
500
TOTAL
78,226
60,718
EQUITY
Share capital
1,155
1,135
Share premium
14,625
9,152
Merger relief reserve
42,805
30,003
Retained earnings
522,926
398,102
Other reserves
(10,176)
(5,514)
Investment in own shares
(27)
(155)
TOTAL
571,308
432,723
TOTAL LIABILITIES AND EQUITY
770,123
621,855
CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve Months Ended
June 30
Three Months Ended
June 30
2023
2022
2023
2022
£’000
£’000
£’000
£’000
OPERATING ACTIVITIES
Profit for the period
94,163
83,093
23,058
27,039
Income tax charge
20,000
19,286
1,878
5,452
Non-cash adjustments
49,165
53,799
8,949
7,571
Tax paid
(22,737)
(14,033)
(6,548)
(4,846)
UK research and development credit received
—
344
—
344
Net changes in working capital
(16,073)
(21,770)
5,990
11,552
Net cash from operating activities
124,518
120,719
33,327
47,112
INVESTING ACTIVITIES
Purchase of non-current assets (tangibles and intangibles)
(13,674)
(13,967)
(1,870)
(3,772)
Proceeds from disposal of non-current assets
187
272
39
31
Payment for acquisition of subsidiary, net of cash acquired
(79,691)
(10,364)
(43,918)
(229)
Other acquisition related settlements
(21,179)
—
(21,179)
—
Interest received
3,506
184
1,655
119
Net cash used in investing activities
(110,851)
(23,875)
(65,273)
(3,851)
FINANCING ACTIVITIES
Proceeds from sublease
439
560
114
142
Repayment of lease liabilities
(13,488)
(13,805)
(3,528)
(3,337)
Grant received
494
139
22
49
Interest and debt financing costs paid
(4,011)
(885)
(479)
(190)
Proceeds from exercise of options
5,568
8,913
1,170
1,547
Net cash used in financing activities
(10,998)
(5,078)
(2,701)
(1,789)
Net change in cash and cash equivalents
2,669
91,766
(34,647)
41,472
Cash and cash equivalents at the beginning of the period
162,806
69,884
199,200
120,407
Exchange differences on cash and cash equivalents
(772)
1,156
150
927
Cash and cash equivalents at the end of the period
164,703
162,806
164,703
162,806
RECONCILIATION OF IFRS FINANCIAL MEASURES TO NON-IFRS FINANCIAL MEASURES
RECONCILIATION OF REVENUE GROWTH RATE AS REPORTED UNDER IFRS TO REVENUE GROWTH RATE AT CONSTANT CURRENCY:
Twelve Months Ended
June 30
Three Months Ended
June 30
2023
2022
2023
2022
REVENUE GROWTH RATE AS REPORTED UNDER IFRS
21.4 %
46.7 %
5.2 %
35.0 %
Foreign exchange rates impact
(4.8%)
0.9%
(0.4%)
(4.1%)
REVENUE GROWTH RATE AT CONSTANT CURRENCY
16.6 %
47.6 %
4.8 %
30.9 %
RECONCILIATION OF ADJUSTED PROFIT BEFORE TAX AND ADJUSTED PROFIT FOR THE PERIOD:
Twelve Months Ended
June 30
Three Months Ended
June 30
2023
2022
2023
2022
£’000
£’000
£’000
£’000
PROFIT BEFORE TAX
114,163
102,379
24,936
32,491
Adjustments:
Share-based compensation expense
31,058
35,005
6,923
7,463
Amortisation of acquired intangible assets
12,270
10,823
2,843
3,077
Foreign currency exchange losses / (gains), net
10,729
(9,944)
699
(6,785)
Restructuring costs
6,588
—
2,905
—
Fair value movement of contingent consideration
(10,613)
—
37
—
Total adjustments
50,032
35,884
13,407
3,755
ADJUSTED PROFIT BEFORE TAX
164,195
138,263
38,343
36,246
PROFIT FOR THE PERIOD
94,163
83,093
23,058
27,039
Adjustments:
Adjustments to profit before tax
50,032
35,884
13,407
3,755
Tax impact of adjustments
(11,829)
(6,933)
(3,530)
(1,448)
ADJUSTED PROFIT FOR THE PERIOD
132,366
112,044
32,935
29,346
Diluted EPS (£)
1.62
1.43
0.40
0.47
Adjusted diluted EPS (£)
2.28
1.93
0.57
0.51
RECONCILIATION OF NET CASH FROM OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW
Twelve Months Ended
June 30
Three Months Ended
June 30
2023
2022
2023
2022
£’000
£’000
£’000
£’000
Net cash from operating activities
124,518
120,719
33,327
47,112
Adjustments:
Grant received
494
139
22
49
Net purchase of non-current assets (tangibles and intangibles)
(13,487)
(13,695)
(1,831)
(3,741)
Adjusted Free cash flow
111,525
107,163
31,518
43,420
SUPPLEMENTARY INFORMATION
SHARE-BASED COMPENSATION EXPENSE
Twelve Months Ended
June 30
Three Months Ended
June 30
2023
2022
2023
2022
£’000
£’000
£’000
£’000
Direct cost of sales
20,927
21,899
4,931
4,878
Selling, general and administrative expenses
10,131
13,106
1,992
2,585
Total
31,058
35,005
6,923
7,463
DEPRECIATION AND AMORTISATION
Twelve Months Ended
June 30
Three Months Ended
June 30
2023
2022
2023
2022
£’000
£’000
£’000
£’000
Direct cost of sales
17,931
16,142
4,689
3,971
Selling, general and administrative expenses
14,996
12,827
3,590
3,273
Total
32,927
28,969
8,279
7,244
EMPLOYEES, TOP 10 CUSTOMERS AND REVENUE SPLIT
Twelve Months Ended
June 30
Three Months Ended
June 30
2023
2022
2023
2022
Closing number of total employees (including directors)
12,063
11,853
12,063
11,853
Average operational employees
10,872
9,492
10,605
10,468
Top 10 customers %
33 %
34 %
35 %
32 %
Number of clients with > £1m of revenue
(rolling 12 months)
146
134
146
134
Geographic split of revenue %
North America
32 %
35 %
30 %
35 %
Europe
23 %
21 %
24 %
22 %
UK
39 %
41 %
38 %
40 %
Rest of World (RoW)
6 %
3 %
8 %
3 %
Industry vertical split of revenue %
Payments and Financial Services
52 %
51 %
52 %
51 %
TMT
22 %
25 %
22 %
25 %
Other
26 %
24 %
26 %
24 %
View source version on businesswire.com: https://www.businesswire.com/news/home/20230918845348/en/
INVESTORS: Endava plc Laurence Madsen, Investor Relations Manager Investors@endava.com
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