DAVA - Earnings call transcript Q3 2024

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Operator

Good day and welcome to Endava's Third Quarter of Fiscal Year 2024 Conference Call. [Operator Instructions] Please note this event is being recorded.I would now like to turn the conference over to Ms. Laurence Madsen, Head of Investor Relations and ESG. Please go ahead.

Laurence Madsen

Thank you. welcome call. third and year of everyone, conference XXXX afternoon, to quarter Endava's fiscal Good

reminder, conference a As this recorded. call is being

Joining Endava's Cotterell, Thurston, Officer. are Officer; today Mark Financial Endava's Chief and Chief me Executive John

we Before listeners. a to quick our begin, reminder

respect our remarks our impacts industry the of our as by call obligation reflect our only but full other to regarding technology performance. shareholders; that trends no value to ability of include to materially and forward-looking GalaxE are to or for extent on these note including by them statements. cause from events predicted and fiscal speak from to of today's to for subject could of forward-looking technology and our for that with differ uncertainties of the we to of services; forward-looking QX Please our the results fiscal ability our such should during our year law. Our differ or results and or enhancements business; actual be contained subsequent statements not plans, accompanying statements business; and market timing future demand results development our to, our expectations impact an made statements regarding in may the for those long-term operations.These this the as limited required headwinds Actual the circumstances update from not on presentation conference to forward-looking results the risk people, strategies, our indication implied facing acquisition and considered date than certain to create opportunities statements events timing undertake of materially and and and our today in intelligence; and our recent and XXXX; statements guidance business clients, including, our capitalize year our XXXX and offering; artificial industry, clients reported

please Report XX, information, and to and section our Factors we'll Annual on more September financial during non-IFRS For present IFRS XXXX.Also of call, Securities with Commission refer filed the Risk measures. the Exchange both

A provide be a we investors, of to directly presented measures isolation the information useful or considered intended this to be financial IFRS. While included Relations for in I'll presentation our measures in which is well our release in over most information press today's earnings non-IFRS the of on call the to call financial link IFRS will not the Reconciliations as this believe such the with also of to website. John. substitute on replay accordance the of as can comparable site are investor information non-IFRS measures for Investor both website.With find as the or SEC turn that, presentation, the on you available

John Cotterell

all I thank I'd like Thank us that all well. today hope you to and you, Laurence. you're joining for

themselves off we sense As post understand environment, the have current their priorities as to aggressive we which spending Clients they perspective come I that My started, challenging. is find of all sort I to get want uncertainty. COVID. we trying face been on very to has a meaningful spending some now tech macroeconomic think period continue share through

therefore and in be generative digital sit to systems, data to planning the re-engineering of in complexity, core AI, scale reinvent for systems; technology it meaningful be ready. stacks beyond the core transformation taking there longer that some production-ready needs to data and to but projects extent into to industry investments go ready demand right enterprise. and which of much above risk and involved believe also truly transformation and Every and the significant to access goes AI. technology This digital be the complete first pent-up generative requires interactions.AI therefore services and to the requires is undertake Due can we for effective the uncertainty much transformation customer core itself opening mostly commenced. to work enhance and must is the these However, take before work to up advantage systems deeper get

created All meaningful think of what pause periods. and this experienced a I have we has a may that but be demand deceleration, prior pent-up more also than in

or our these maintain aren't temporary competitive we positioning. multiple, our long as happy While with as share believe are we price I

delivery our to and been continue give the serve diversify build people when this ready to nimble to of a and and this clients our emerging GalaxE to and we footprint solutions to accelerators for approach market. relevant and Our ability has continue to set moved our our for market in will us environment with invest be why very turns.That's that

been edge talent development around real pool our has scale helping a they adds agile key production, and very with as clients quality that growing yet again. long-term the pivot to in demand as areas leading innovate. clients agile. fast by history ready from technology Our characterized our ideate value industry advantage to a staying gets is The success move concept We entire is and in competitive centered capabilities, services high and and of clients nimble see size that meaningful proof to to to as relevant but our

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and we With transform efficient capabilities, clients' more it so technology becomes these help underlying agile.

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results. on our Moving to

our performance March now financial XXXX. on me provide months for ended update an business and Let the XX, X

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We some seeing emerge, opportunities including are early together. wins already

significantly has reminder, the U.S. a the is in pharmaceutical which successful leadership sector, offerings. a scale U.S. we we very be able with these will health to comes believe vertical. care we XX% on at payer clients, companies. services As over clients GalaxE's penetrating of attractive and Based based revenue proved from GalaxE's believe large conversations

we Here benefit management are some GalaxE plans on examples leading across pharmacy third-party working provider health benefit insurance platform a leveraging the complex is facilitate multiple care, GalaxE' to pharmacy projects currently working of health are clients.In various self-service plan of managers. portal with for

health will agency scenarios will And performing regulatory to building helping Medicaid, and a client. DevOps for goals business requirements operating for initiative bank reduce transformation large CMS, Fortune to of improving be into significant of sustainable eliminating expected cycle testing support XX derisks retire security GalaxE and is their for automation X asset systems. operations. excessive plan while the create in leading costs the API oriented focused platform costs multiyear and quality. This with rules, Medicare product coverage. extended to their systems functional integrated fintech are allowing client, and is updates also finally, and process, Utilizing the resulting expenses. accelerators, the in a accuracy, for end-of-life opt functions, platform to portfolio to life workflows, the proprietary a accelerate This data lower traceability and with and with implementation a is goal cloud-centric efforts is improved tooling; out-of-pocket map management member that working market savings driving monthly Additionally, GalaxE migration map our members working enabled, a database is downtime. significantly maximizing quality complete dependencies while and plan implementing exposure government and regulates uniquely advance and testing the for mitigating cases while services implementation technologies used the building business end-of-life a its of for payment cost for solutions global flexible health improving and initiative the speed for define clients.We help achieve are GalaxE's and assets.By solutions, a to to to the a GalaxE experience. new U.S. extract future identify teams bank team high leadership to approach their on innovative GalaxE's scalable delivery client's Medicare providing

creation We internally industry Moving recently technology. announced called on Morpheus. of an AI the to on our update Agentic accelerator

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pass continue our call financial business exciting who will walk year. our customers.I'll the and results solutions long term for and through now on guidance their provide the clients the fiscal quarter We the quarter health Mark, our for to for and manage the and coming organizational you creating for will and to culture maintaining

Mark Thurston

the currency, in XXX.X in period on year. million XXXX a we from the the X quarter previous in X% GBP the ended the the last inorganic the year, constant our prior Thanks, the revenue In positive decrease quarter. March in prior revenue and to reflected same quarter. XXX.X GBP period was contribution John. constant XX, range XX.X% for the XX.X% within million compared the same a year same totaled over you in Endava's declined revenue period X.X% down currency months prior Sequentially, by to provided during

GBP from As to GalaxE quarter period same compared before XXXX a tax the March profit a XX.X contribution Loss ended. during prior X.X before the ended reminder, million XX, there the for was in months was tax no just year. X GBP of million in

same to profit prior tax in in XXXX period ended Our XX, the XX.X the GBP compared for X XX.X% months million before before same was XX.X adjusted period the compared the for margin X profit the million months for March March prior to was tax for XXXX GBP the ended X.X% adjusted year. year.Our XX,

XX, XX% the the March World grew America diluted XX.X same prior million per March March declined the from X same ended year-over-year March XX% declined X on and ended over U.K. of accounted revenue X revenue. months XX, XX, year as XXXX from the calculated Rest for North XXXX earnings the for XXXX revenue. shares fiscal XXXX and the decrease. share Revenue the accounted Revenue fiscal the revenue. GBP months XX.X% diluted adjusted Our to XX% America months declined of X% March March X In The million of North X.X XX X% March over and months for World for from period last period period the XXXX ended accounted XX, March calculated X from XX.X for for the was U.K. XXp same of period same X%.Revenue for over X for compared of and diluted the XX% period months same period the spend for year from our last last ended XX% XXXX XX, from ended months Revenue the to the months for over and XX, XX.X%, a year payments X XXXX accounted largest million of XXp to last shares. of XXXX from our for accounted and for representing Rest X XXXX mobility and XX.X% last fiscal months year the ended compared fiscal Other periods, the declined Europe grew fiscal largest the for compared X for March XX, the Europe XXXX year ended the over for March markets XX.X% year. from decreased of GBP Revenue revenue, clients X.X% period accounted X last period from ended on revenue. XX% accounted ended XX, as of March X March accounted months ended XX% X period revenue. XX%, grew XX, fiscal fiscal the client XX, for XX% for fiscal capital XX.X% the in over year. declined same same same year XX the to XX%, XX% insurance Comparing ended from average XXXX over clients million last per for revenue.Revenue X.X% from X.X revenue same the last months year XXXX grew XX% the months of for months for for for same ended TMT Revenue the the and the and XX, XX, X.X%. declined for banking Revenue accounted

adjusted the XX.X XXXX months ended same GBP X.X period to free for flow fiscal March million year. XX, last million during cash GBP Our the compared was X

When towards X used XXXX XXXX. In period the cash subject compared at end and the Our X.X% March cash the to GalaxE. as at expenditure of not XXX the for the percentage fiscal which XXXX equivalents the GBP totaled for at months guide to million regulatory compared turning 'XX. last June to of the Capital same year.Now million to April, the approval. we announced at funds GalaxE, our remained of time of from our the did revenue March XXX in outlook million full was include acquisition February, contribution and GBP year period XXX.X GBP X in XX, XX, we X% a ended we fiscal quarter our XX, cash

of under XXth following Improvements of April the transaction. the XXXX, Act the On closed the waiting we the period expiration U.S. Hart-Scott-Rodino required of Antitrust

including QX The range. guide of guide XX% top from represents So bottom the and the the growth at GalaxE includes the GalaxE. contribution sequential XX% of to

QX. flat otherwise remains Excluding to guide the compared GalaxE, generally

representing fiscal X.XX.This full constant diluted of X.X% in guidance constant XXXX is follows. range are XXXX Our between in the million fiscal GBP basis. comments. XXX This be revenue X.X% Endava year of range fiscal X.X% be diluted a to adjusted in EPS Endava guidance decrease to is ready to million full to and on XXX as and our revenue QX GBP per X the XXp XXXX assumes for the year and on X.X% adjusted open to the for fiscal for exchange between of Endava X.XX X.XX revenue XXX prepared XXXX expects representing share.Our million GBP GBP expects to EPS currency per follows. be year-over-year concludes Operator, now the GBP Endava year be expects the growth range year-over-year we line of revenue share. April QX on EUR for a of currency when rate XXXX guidance above as XXp to in rates exchange XX, range X.XX to GBP GBP USD XXX million year to Q&A. year to the and the was basis. expects

Operator

Guggenheim The Lee [Operator with from comes Securities. Jonathan Instructions] question first

Yu Lee

you understand us the remind next the Can you EPS quarters? how implications And progressing? of of integration revenue is over GalaxE us the and can few help Solutions

John Cotterell

and pick on. up the so how can going So the and Mark talk about then revenue I'll is integration on

So very, very it's well. actually going

we preferred contract It India also signed done business operating we are customers they expanding and in we've AI of GalaxE phase. start their telco. diversification telco, more are who that are in industry that from larger see the take on seeing proposition piece where the European the as together. XX in transformation center supplier we're deal moving business, by completely out of in which India is up Plus quarters helpful the that ahead. call contracting of that we're finally, lot so customers that remarks, we have coming footprint in talking interest because in that across a was pieces doing of We're And touched and we're opportunities you'll to the of strengthening. a through where work is winning I now now for the can significantly have space a enabled and others them. The that are them. than in geo footprint enterprise couple list already customers, prioritization has essentially a we've discovery those us We One fact have services for opening more getting that our of following as to been about strengthened and

So organic to the us the give we're very, deal Mark? forward. very going going that GalaxE positive about and opportunities it's

Mark Thurston

said quarter-on-quarter represents So in end so XX% revenue of the on of XX% GBP XX and million of prepared run the perspective. it's XX% as sort at about the high GalaxE comments, represented my sort the uplift growth I about guide. that of rate

of the of be reasonably that sort signaled at to X quarter the contribution in time we last EPS negligible so this quarter. is heavy integration costs the to are expected call, As

adjusted towards amount but we the be out it the line But is should this I think we up margins move in where in at are start gross Endava to their go metric stage. and through the call to we go margins their level, should a too will Endava. integration process, into PBT certainly as FY 'XX, gross early through with

Yu Lee

spend? customer delays in we of you gives committed fiscal think conversations that versus in remarks the especially some your in projects as what ramping and around follow-up, up already a 'XX prepared pent-up your be As potentially increasing achieving potential outlook may demand confidence discretionary about

John Cotterell

the Mark year quarter high there's the that fiscal committed just it. contracted guide leads as the last work which year. our ago. Therefore, can current what confidence in touch and full month that on mean that the call we around doing and our that quarter have, numbers have over proportion we a within a is I we're in so to fiscal 'XX, is very the we a us the currently sure. gives we're moment. Yes, visibility guide, But

Mark Thurston

Yes.

I guide. committed is percentage XX% and think contracted the within that

coverage very compare when it's it norms. you level historic of So were what with a our high

Operator

next comes Bryan TD from question Cowen. The with Bergin

Bryan Bergin

you since has closure I'll progressed, with as of deal sense kind deal past Maybe share you're talk May? calendar give with Can GalaxE. And noted XQ you understand that you April growth 'XX? a reported any you Can through and about just a on particularly last start how Can the conversations us how you've ramps clients? I behavior demand. thoughts you the work of March having ex client you flattish sequentials into and may that progress gone as balance

John Cotterell

the So behavior Perhaps previous worth on bit. business, that closure which I've clients this some picking discussed and client a up running programs a there's as of natural those complete. is calls with have is dynamics. we and actually little our projects of unpacking

so And through. with each overcome of the that's downward quarter business sort coming new which we there's a pressure,

than amount new as a been spend, the was it, clients dropping where spend drive needs quarters quarter had us off the be discretionary series for of the larger growth. to lower. Clearly we've calling by so that's And to or I that has each

it's quarter-on-quarter. leading quiet fact the drops very In to indeed been

build with it is some off, and still with think coming is it That was gives flattening being is at and opening touched break is is I about backlog where than on as showing work we're now spend Mark, discretionary that continue decisions on some spend money that end the that we'd it of are any point, quarter impacting I the building like.But that clients that and to and going business the remarks. that larger And some the done based wouldn't we spend that work that as color continue discovery the through confidence that confidence quarter needs where not we they backlog on it some the programs coming to the systems, making on the conversations, and of in the to is were clients that numbers? early them. The money fact through. never out continues and whether environment. signs of production last go actual of that the a doing of much have strengthening if on a With us to the through ahead underlying to discovery at customer

Mark Thurston

I down visibility, to Well, think Bryan. all it's

the at as XX%. with at can you level So of committed tell there's high moment, coverage the guide contractual

we So into term first visibility. quarter, certainly just stronger have the near looking

back this where I pipeline which it adding think to velocity conversion be through it the at sign comes growing. is it's the continues issue the initiated again to to we're and to issue. It work an pipeline proceeds

difficult results growth we when for it we So we'll when when anticipate give be year 'XX. guidance of giving uptick, sequential at in terms the our is get full September moment say clearer and the to the we and fiscal June obviously to outlook our year to

Bryan Bergin

has Ukraine. in result Can think inputs, war leading market particularly a expensive talent we margin we a of your navigating acquisition become understand standpoint? in more Romania? maybe that given talk just as about guess you from scale, crowded Europe as about Central just you're that I And Understood. gross more Okay. becoming Is how the

John Cotterell

you're further where true Central up that. needed European move pushed up has not and Europe are other that more costs. into I'm That's the expensive. us. for west become had But haven't us, may picking territories more east certainly to who organizations not there do that's expensive who've be Central we sure to than So previously It us operated for

Central at all we're In seeing moment. inflationary fact current demands the in on, Europe lower not at impact the environment going and the are that given

Operator

Ryan with The next from question comes Citi. Potter

Ryan Potter

you're looking seeing of still pressure. Just the across kind be vertical demand your some of to verticals and the looks most payments where

complete on then now clients larger the stable? is stake into vertical, and start could a terms its there and see deeper little Worldpay some So also your seeing if And dive the of I you're seeing that recovery Mastercard if there? you what to any was to a improvement of largely it in wondering could there you comment takes if in if majority also trends you're remain

Mark Thurston

largest clients, X of then MasterCard John I'll up of talk payments pick the and our I'll about portfolio. and the about let Worldpay, and sort balance comments

John Cotterell

that of the just Mastercard, in on business continues of rest The RTP. remains the outside very RTP Mastercard. doing the start initial the on It's to the of the So actually is we're a offset growth Mastercard work decline payments from work growth and smaller slowly by just it healthy point. work the space story with real-time with

the and the very remains balancing think quite isn't But parts underneath relationship across the one more healthy more surface meaning the Mastercard that portfolio. slow a seeing Mastercard. we're and of I we're So decline overall into other breaking the

we it's planning that that spinoff they've we I'm healthy. So with been we'll of coming on In hopeful seeing see for And very are are the are amount planning restructuring the Worldpay work and work longer-term first help Worldpay, of some around actually can funding the reasonable receiving signs and them a that how of future, on way. that. that them from execute the coming we working our the

Mark Thurston

better where in And I a TMT. markets, that sequential the think area The mobility banking, rest progressively portfolio, saw and capital if you which X is again of again fruition and want there macro where sort mobility. look programs the out are the of decline we And the rolling cross it decision technologies. from key at coming automotive, choices But drivers portfolio, the given was where flat outlook, to earnings a of the real apart the the in making of and comments those sort off sort terms insurance of of is word. to we're North quarter's faced a X of delayed and around areas. some space. it's come peak America made in that most logistics is airlines large in due seeing We relatively notable flat a comments last in made then activity it about we some rest mixture of client of was has Those in it for spend conservatism

Ryan Potter

I shifting 'XX fiscal guess margins. midpoint maybe was outlook it. The Got here. lowered to EPS

do lower much drivers be Can fiscal the maybe out GalaxE? anything you you provide from for call improve this? your have else versus how to and as on 'XX? XQ expectations? coming the you expense expectation head details margin 'XX And here? utilization potentially what that margin then are or margins could some fiscal higher interest driving or comment is integration on on from side, Will improved costs Like factors So into margin you to from it

Mark Thurston

We the so big much was oneoff lower QX restructuring guide. secured savings tax provision quicker significantly of savings a rate anticipated was we than which G&A is on the in to than a anticipated did the the at nature. beat. release XX% due the also tax our at Well, through And better of EPS time

that between includes going terms will see but figure, GalaxE, some terms as to we to margin up that reduce in we gross There of in in probably we will the really bench pricing QX out Now of utilization. anything this in to sort of in bench. and what isn't reduction improvement into improved reflect to see continue XX% XX%, lead uplift

that. So will the we of through program in so sort will with we continue restructuring announced that continue We year. with our back February

I sort think then of us as give upside. some normalize well. will our that to will And start SG&A So

in fiscal leverage start we of SG&A through we integration think gross improvements So and we've for the the from of that there's PBT heavy year we terms at got significant as the QX, at through integration GalaxE moment, go in margin sort given margin to GalaxE. guide that implies the next adjusted our Thereafter, I not of moment budget a get uplift the with a improve

Operator

The next Maggie with William question Blair. comes from Nolan

Margaret Nolan

headcount a have target in percentage distribution you working that Do multiyear of terms you're geographic towards? for of

John Cotterell

diversify we globe. is the time that expectation over So our across will

So locations concentrated of staff Europe other to are. particularly about currently and where in delivery X/X we are in our our relative Central concentrated Romania global

also that time move up geographic a changing. and We move approach sticking then we and business operating all expands, as to business mix start and Asia proportion expect India shift to we're in of currently Very the to the to expect Pac, our We're of LatAm But grow. will to the the mainly model that that over out see in delivery we to have. market looking continue delivery Vietnam because capabilities those as delivery not now, much up. the of

Margaret Nolan

in additional terms your about approach taking for for view when think quarters kind June, you can you'll quite the is given considerations visibility build remind year in Are guidance fiscal recent under has that method of your next been the we of end typical build the next limited as year? guidance And you'll year? the fiscal you any how of in what how you us

Mark Thurston

I believe to and record beats had of date track a and more history recent raise.

So GalaxE we part with are are there so forward in integration because acquisition going guidance to basically our and sizable is we've done that cautious be challenges. as go of we of a sort

sort to aim will appropriately. guide we of So

we'll surprises. appropriately as I of hopefully deliver we process go for the we through we and as between sort that that any September view fiscal, form the guide integration don't so now So think

Operator

The next JPMorgan. Puneet Jain question comes with from

Puneet Jain

significant So DAVA AI near-term or growth perspective you that sector. how age? yet right a gave companies you John, as the of work for expect it us the digital Could What Gen doing could will for be companies engineering are this new review you or why hurting right demand clients? on to win medium-term to why the in the do be opportunities you represents and for a group us AI maybe helpful DAVA have and names type digital engineering

John Cotterell

Great question, Puneet, love I it.

a so the we've So has layer lot top interaction, been for helping that last over XX years, that look them. the has customers you their X the of hugely if been largely from really transformation it around improved what change of valuable drive and we benefited core, driven been a the And is a and enterprise layer. layer that's to revenue creating has organizations see over that of across top the customer on enabled at it digital way enterprise

into out in As that the of drill get of business the core benefit the we'll can AI, the you in provide processes order into to systems, to need data change that we exist the quality get the and AI.

much You've years in out adopt to more, demonstrated say, who very we've typically, newer get have than got the have legacy flexible the many that who a modernization let's the capability. the the going organizations over AI both to the so core.And core. transformation digital who benefits a so have to core, core larger enterprises find opportunity data and roll easier and the capability already organizations is for it the are that's Organizations

my I this. Endava that was remarks actually is preliminary positioned was in incredibly for highlighting what well Now

data-driven been building up changes which a for in make so tried as the over have have And more core XXX core coming. is available with customers, a modernization that we We actually flexible I be to enables suite, and that's many XX last whole highlighted XX to the years way system AI across to X,XXX that the existing what actually do made to need opened data them and understand what systems.

to driving from a that's put you X wave of things doing all the being going uniquely coming ways that's new And the it's So that together, needed. our those modernization in a on and there. kick we interaction, through transformation out almost core AI and so capability digital ourselves the you've and up automation got competitors taking differentiated position open customer see as against

Puneet Jain

mentioned to target? now utilization your was utilization I in or like right That's quarter look a very this X% QX. think, improve you basis. take your helpful. And there sequential Mark, your then versus headcount give some on scope about does How is down

now rates targets? So can your versus about right utilization you talk

Mark Thurston

Yes.

pretty so for the utilization moment gone. a of XX% it's about just stable sort quarter XX%, at been the has So

bench currently so pretty is low, Our about to speak. X.X%

will basically. at from we've a remain X bit margin going we've that. percentage utilization in caveat been And is the delivering that good level, XX%s. is gross But movement at improvement greater most around of up typically X all sort point margin. to may on utilization equal improvement come Again bench go things it high our X little lower. when historically So percentage been And being of margin,

that what for around is I business. we going integrating said hold to think the a stronger largely true GalaxE well. We I them are and as But hold need so operating metrics of

Operator

next The Deutsche Bryan Bank. comes question with Keane from

Bryan Keane

Mark, on margin. gross just wanted ask to

little I it quarter you're I an think we trying below just a figure is Was the know improvement expecting. the to why threshold the fell it about fell. were in for which callouts out the just XX% quarter, quarter but there what sequentially, below itself itself? talking any

Mark Thurston

did fall, was it but guided. It we where

it's and XX.X% how basis up what the adjusted guiding. your rate. lower an to EPS number. that tax interesting we were it's So you kicker basically through was reduced so The SG&A and think line got it's in the on was XX% We on with

we just notes margin need calculation So gross on to maybe difference. that compare

Bryan Keane

we fourth think have we just so then the in fourth? at expect the total And it. contribution. There you be should from some the look we'll gave GalaxE acquisitions other might contribution Yes, I us contribution inorganic adjustments inorganic quarter What's there. the for other

Mark Thurston

which negligible. TLM, It's It's we it's GalaxE. from ago, about pretty of year all very a had mainly but minimal

Operator

The next question Stanley. comes from Morgan James with Faucette

James Faucette

couple follow-ups. quick a Just of

what of like you frame? that the of Just what seems business it a a sense come there's Worldpay, to starting of you're said are that see terms get early that indications thinking you back opportunity some company. like any in How there potential over as time of there. First, like because on and over about GTCR return and looks lot engagement that trying of takes management to

John Cotterell

clients' Yes. I of obviously decisions. terms mean, sensitive in James, investment area a it's

stakeholders across good very COO, the CTO. have We the

conversation and as far investment as them in their forward. about part involved going with change shaping and plans, to moment. We of their go regularly expect at them feel engage with we that So plans. should up we be think It's the much I very

James Faucette

will you're the GalaxE And that then And attention how Understood. operations? ask of for in think and the about working road? how talent wanted dynamics paying in down capabilities more that pricing and been the that at improve what least competition traditionally I integrating and quickly that terms the thinking Endava's broadly? to trying are of to Just rest now, market of and through the about and you're kind into between Endava expand things that had relationship to right GalaxE your where

John Cotterell

in you is at of so it's the the GalaxE, that pricing different if would because we mean to that workday to do. lot of we that onshore mix maintain a and look thing expect offshore not first in what sort I say and to value-add of revenue per average Sure. Endava

strength. second something The an that Endava digital we are work have do is is is that the mainly the thing that strengths complementary we very transformation so

out was I modernization X/X stuff the GalaxE of core it X/X data and the that the numbers at from set. look you experience about there, Endava If work about that was that put of

pure good that we do that. is apply modernization and the core the strengthened sets that you can and And that.There's then alongside for India to that. transformation deliver place Indian we that look as when service, use those X out gives strong that the us as end together that they India. of true think I through. bring lot Put transformation if our with tool the they've AI to still in work drive a you you you to a pulling So accelerators digital add a things the technologies that have that up India strong put at enterprise well have, differentiation capability experience and And against if to comes side, do as plays it India of a and capabilities we patented differentiation, nearshore on

price and see We as enhancing And earning so being that's very over how to it we're seeing it. time. and much protect able being

So probably I there. think were that's you economically searching what for

Operator

next question with Wedbush. comes The Moshe Katri from

Moshe Katri

So X questions.

and terms of the some regions? terms verticals, conversion has get are then any sort changes general, the pretty Can bookings new on conversion been Obviously bookings. been that of have we slowdown And how color bookings been of issue inconsistent. in of in on seeing converting? some an First we fact there's in with

would there helpful. So be color any

Mark Thurston

really I on. I the number from quarter that been and quite size pipeline towards was sort last through sort deals What call. slow or John them the you average contracts talked of where on mean my the we of what significantly sort they has But successful. guiding on so being reason and told from time as the the we're our deals pace the terms mean in of bottom. I earnings haven't the comments That of focus which growing, proposal large at are that sort previous changed the that a go in of of is been of is the to partially remains hasn't we're said, mainly

progression of of not one through basically the rate. terms win issue velocity an in it's of pipeline So

Moshe Katri

is us if sort Okay. And rates? of Can remind of color or then you just GalaxE just kind any their on growing on growth GalaxE. this year

Mark Thurston

said say. obviously 'XX. I sort a comments, June to took in to is mean we control, for budget It put to XXth too together have We April. of of ourselves as the early

looking at through the way. of 'XX the process rates are their establishing certainly calendar year-on-year And forecasts the so calendar growth look growing moment and those were and and they 'XX. run they by have at calendar going year-end like. between But growing what at we were They certainly

John Cotterell

and that for the capabilities lies going of GalaxE in larger the from with the really their of clients because sort benefiting Either to the opportunity particularly does That's the GalaxE Endava and that big win the thing the brings enterprise that scale to where footprint about acceleration. we're Endava capabilities, I've think us. or on talking transformation that been footprint clients get I us deals expand can together. we collaborate allowing

we're the than see looking organically where themselves. them So by growth that's operating to rather just

Operator

from comes Susquehanna. Jamie with Friedman question next The

James Friedman

with of follow capabilities. John, possible earlier AI. you question, lens in right one your it to Is where of the wanted your perspective on up to about share in to It's the Puneet's terms maybe Slide talk win XX? your I

expecting to have don't where or look at delivery; lines, but seeing of AI you at or front in are of realization you it? it in context production if you, if service even data this So you digital engineering or the say, these revenue point see

John Cotterell

to out market mean than go that's I So the underlying what we capabilities pulling with. rather

are there space derisks or on we think modernization that much digital a more space out to over a go so years. many digital helping in So and that been and performed of classic we core win have many to about able unique side, with patented into give right I the doing route to that revenue large modernization combine the be them have so their business, efficiencies getting done the driving with and comes that's The to that actually from are wary there core market so. And enterprise transform that propositions client that really cost whether been being transformation transformation can solid approach that all program. modernization so well enterprises we to

it you those do because the together of to because that digital able process side do have through can to right to That's very what data And drive capabilities been as get, up transformation access in a really opens Now can the way. cleanup put where that, we you see you that we win. X organization. you the the on of differentiated our

James Friedman

surprise. flow last had free quarter a had cash a question and But flow I as Okay. of it be and this so cash else the think And the the I adjusted called down I XX% that here at? revenue a looking wasn't revenue X.X% what out then, [ see just pressure. obviously Mark, free you pressure lot should of in ], percentage it's the we from a profitability But about

Mark Thurston

] have flow. cash typically currency [ in We some the

it low usually low a So quarter this cash is as a percentage as as of not flow revenue.

of GBP the We million. component have restructuring taken cash X.X of about the of million flow X cash through sort GBP

think I this of Endava think has sort percentage a of about points that is it. So of representative of the generative the flow to don't think couple I position forward. I cash

drive restructuring. of has and low cash I of think to of strong There a which profitability free it of as the improves going a been sort sort that is position. slowdown the sort the related going flow will us through revenue, a profitability of definitely forward, our combination is

Operator

Tom from comes question next KeyBanc. with The Blakey

Thomas Blakey

of to like fiscal how of have about few we quarters? of the not terms bookings these a for take few of hear pressures a some 'XX, from portfolio quarters as your we question the good you guide, pressure to of the downsells maybe potential current out whatnot. like offset but far question on look at in to of pressures? does new in upticked think everybody. into look terms the out, be of it's fiscal kind through to My John, in next kind portfolio like I look business kind When here exactly next That'd and was What a downward seemed it that are the of downward when you helpful look 'XX seeming

John Cotterell

through this pressure we've is downward you something happening so through growth is What of times the just thing. experiencing has XX This as end or an unusual where that big of where boom that's cycle. an well. and natural last to all that over want the backlog also quarter clients coming take they're that away yet been offsetting it done It's the discoveries has is don't projects months been we're this we've been We're to I the and work spend been new ahead the offsetting discoveries it coming that's paid making not that of with for -- not to stabilization. seeing where decisions it. seeing enabling go

to not through opportunities does see the break core does question And and start when of the actually When is that. We'll in backlog to now happen? So coming uplift? upward enabled call But going the new through to that anticipate accelerate early discretionary in we stabilization it's coming where is to trend spend point from QX that too that's an that's is that lead to this to September. right we're call upturn. ready

Thomas Blakey

perspective. in of was the the I cadence pressure. GalaxE of that terms normal That's the the from GalaxE and in from EBIT then helpful maybe prior just an understanding were the given over margins topic. organic to teens relatively downward under whatnot high switching And just back research

their we revenue be us through of year and Just puts there That or look next would out kind if seasonality walk takes the as model organically? the maybe well. as and helpful in so like any there's to

Mark Thurston

on numbers numbers. of disclose you've think sort what I been any public it doubt I at. they depends looking

on that's we're us integration until probably which We of That's first the activity, quite and in have to the looking them accounting is IFRS. X longer the for December. be will putting part certainly been at about of integration challenge really so sort policies. months There marked

a over achieve there course line will taking as we will them also be the rate They that some with that said, SG&A of at But basically. per their bill there revenue fiscal of And be 'XX, our we gross levels John achieved. is we the think looking proportion up compared because synergies will us. to be head. we do what to margin have then I higher in onshore can of think

So I'm say [indiscernible]. not to going

have to we going you're we think fiscal which in guide wait more 'XX, for in sort I will of until September. detail to do

Thomas Blakey

And million? has experiencing million, Okay. any been Mark, that XX off just GBP GBP typically GalaxE that seasonality XX

Mark Thurston

we think to It's due of too of to budgets of it tell sort be we like diligence looked through their strong stage, of could to I Certainly the through pick have at sort that. to that working our the honest. try or early their don't in terms spend we of Again the further that timing of looking comment. there before revenue growth. with is to that up process, do do clients. But have work have do I diligence at but cyclicality which really in sort we're we're they can seasonality we the recognition, some due terms any

Operator

CEO, conference over This like remarks. closing to would I to for back session. any question-and-answer turn Cotterell, concludes our the John

John Cotterell

ideate digital data and and driven The remarks, call. AI. that to well on core. drive to systems of talked AI. my by in you touched driven patented AI, positioned to joining Endava underway all to positions help for with innovate for by I us for the the wave next that's about as during alongside the change is technology transformation the we my And capabilities need this of We make this core digital capability excellently transformation in So prepared believe combination a today. both accessible us pivot thank bit digital transformation little enterprise mentioned We've specifically these enterprise in

anticipation invest in market. our will which on our I call, to earnings Thank forward We be these updating will continue you you. year look of next capabilities the full And in to numbers.

Operator

attending Thank you now concluded. presentation. for has conference The today's

You disconnect. may now

Endava (DAVA) 23 May 242024 Q3 Earnings call transcript