Q3 FY2019
24.7% Year on Year Revenue Growth to £73.1
million
23.2% Revenue Growth at Constant
Currency
IFRS diluted EPS £0.11 compared to £0.08 in
the prior year comparative period
Adjusted diluted EPS £0.19 compared to £0.13
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 March 31, 2019, the third quarter of its 2019
fiscal year ("Q3 FY2019").
"Endava continues to deliver strong results and I am pleased
with our performance. Our revenue for Q3 FY2019 was £73.1 million,
an impressive increase of 24.7% Year on Year on a reported basis
from £58.6 million in the same quarter in the prior year. We
continue to expand in all of our geographies and industry
verticals." said John Cotterell, Endava’s CEO.
FINANCIAL HIGHLIGHTS:
- Revenue for Q3 FY2019 was £73.1
million, an increase of 24.7% compared to £58.6 million in the same
period in the prior year.
- Revenue growth rate at constant
currency (a non-IFRS measure) was 23.2% for Q3 FY2019 compared to
39.6% in the same period in the prior year.
- Profit before tax for Q3 FY2019 was
£7.6 million compared to £5.5 million in the same period in the
prior year, or 10.4% of revenue compared to 9.4% in the same period
in the prior year.
- Adjusted profit before tax (a non-IFRS
measure) for Q3 FY2019 was £13.2 million compared to £8.5 million
in the same period in the prior year, or 18.1% of revenue compared
to 14.5% in the same period in the prior year.
- Profit for the period was £6.3 million
in Q3 FY2019, resulting in a diluted EPS of £0.11, compared to
profit for the period of £4.2 million and diluted EPS of £0.08 in
the same period in the prior year.
- Adjusted profit for the period (a
non-IFRS measure) was £10.6 million in Q3 FY2019, resulting in
adjusted diluted EPS (a non-IFRS measure) of £0.19 compared to
adjusted profit for the period of £6.9 million and adjusted diluted
EPS of £0.13 in the same period in the prior year.
- Net cash from operating activities was
£12.6 million in Q3 FY2019 compared to £7.9 million in the same
period in the prior year.
- Free cash flow (a non-IFRS measure) was
£11.4 million in Q3 FY2019 compared to £7.2 million in the same
period in the prior year.
- At March 31, 2019, Endava had cash and
cash equivalents of £59.3 million, compared to £15.0 million at
June 30, 2018. Net cash at March 31, 2019 was £59.3 million
compared to net borrowing of £4.7 million at June 30, 2018.
OTHER METRICS:
- Headcount reached 5,573 at March 31,
2019, with 5,012 average operational employees in Q3 FY2019,
compared to a headcount of 4,700 at March 31, 2018 and 4,246
average operational employees in the third quarter of the prior
year.
- Number of clients with over £1 million
in spend grew to 67 on a rolling twelve months basis at March 31,
2019 compared to 42 at March 31, 2018.
- Top 10 clients accounted for 40% of
revenue in Q3 FY2019, unchanged from the same period in the prior
year.
- By geographic region, 27% of revenue
was generated in North America, 27% was generated in Europe and 46%
was generated in the United Kingdom in Q3 FY2019. This compares to
25% in North America, 31% in Europe and 44% in the United Kingdom
in the same period in the prior year.
- By industry vertical, 53% of revenue
was generated from Payments and Financial Services, 28% from TMT
and 19% from Other. This compares to 54% Payments and Financial
Services, 29% TMT and 17% Other in the same period in the prior
year.
OUTLOOK:
For Q4 FY2019:
We expect revenues will be in the range £75m to £76m,
representing constant currency growth of between 21% and 22%. We
expect adjusted diluted EPS to be in the range of £0.17 to £0.18
per share.
Full Fiscal Year 2019:
We expect revenues will be in the range £286m to £287m,
representing constant currency growth of 31%. We expect adjusted
diluted EPS to be in the range of £0.73 to £0.74 per share.
Endava is not able, at this time, to provide an outlook for IFRS
diluted EPS for Q4 FY2019 or FY2019 because of the unreasonable
effort of estimating certain items that are excluded from adjusted
diluted EPS, including, for example, share-based compensation
expense, amortisation of acquired intangible assets and foreign
currency exchange (gains) losses, the effect of which may be
significant.
CONFERENCE CALL DETAILS:
The Company will host a conference call at 8:00 am EST today,
May 21, 2019, to review its Q3 FY2019 results. To participate in
Endava’s Q3 FY19 earnings conference call, please dial in at least
five minutes prior to the scheduled start time (877) 683-6368 or
(647) 689-5450 for international participants, Conference ID
4226669.
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 Friday, June 7, 2019.
ABOUT ENDAVA PLC:
Endava is a leading next-generation technology services provider
and helps accelerate disruption by delivering rapid evolution to
enterprises. Using distributed enterprise agile at scale, Endava
collaborates with its clients, seamlessly integrating with their
teams, catalysing ideation and delivering robust solutions. Endava
helps its clients become digital, experience-driven businesses by
assisting them in their journey from idea generation to development
and deployment of products, platforms and solutions. It services
clients in the following industries: Payments and Financial
Services, TMT, Consumer Products, Retail, Logistics and Healthcare.
Endava had 5,573 employees as of March 31, 2019 located in offices
in North America and Western Europe and delivery centres in
Romania, Moldova, Bulgaria, Serbia, Macedonia, Argentina, Uruguay,
Venezuela, and Colombia.
NON-IFRS FINANCIAL INFORMATION:
To supplement Endava’s Consolidated Statements of Comprehensive
Income, Consolidated Balance Sheets and Consolidated Statements of
Cash Flow presented in accordance with IFRS, the Company uses
non-IFRS measures of certain components of financial performance.
These measures include: revenue growth rate at constant currency,
adjusted profit before tax, adjusted profit for the period,
adjusted diluted EPS and 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 rates in
effect for the fiscal quarter ended March 31, 2018 were used to
convert revenue for the fiscal quarter ended March 31, 2019 and the
revenue for the comparable prior period.
Adjusted profit before tax is defined as the Company’s profit
before tax adjusted to exclude
the impact of share-based compensation expense, amortisation of
acquired intangible assets, realized and unrealized foreign
currency exchange gains and losses, initial public offering
expenses incurred, Sarbanes-Oxley compliance readiness expenses,
fair value movement of contingent consideration, secondary offering
expenses incurred and stamp duty on transfer of shares (all of
which are non-cash other than realized foreign currency exchange
gains and losses, initial public offering expenses, Sarbanes-Oxley
compliance readiness expenses, secondary offering expenses incurred
and stamp duty on transfer of shares). Adjusted PBT margin is
adjusted profit before tax as a percentage of total revenue.
Adjusted profit for the period is defined as the Company's
profit for the period adjusted to exclude the impact of share-based
compensation expense, amortisation of acquired intangible assets,
realized and unrealized foreign currency exchange gains and losses,
initial public offering expenses incurred, Sarbanes-Oxley
compliance readiness expenses, fair value movement of contingent
consideration, secondary offering expenses incurred and stamp duty
on transfer of shares (all of which are non-cash other than
realized foreign currency exchange gains and losses, initial public
offering expenses, Sarbanes-Oxley compliance readiness expenses,
secondary offering expenses incurred and stamp duty on transfer of
shares) together with the tax impact of these adjustments.
Adjusted diluted EPS is defined as the Company's profit for the
period adjusted to exclude the impact of share-based compensation
expense, amortisation of acquired intangible assets, realized and
unrealized foreign currency exchange gains and losses, initial
public offering expenses incurred, Sarbanes-Oxley compliance
readiness expenses, fair value movement of contingent
consideration, secondary offering expenses incurred and stamp duty
on transfer of shares (all of which are non-cash other than
realized foreign currency exchange gains and losses, initial public
offering expenses, Sarbanes-Oxley compliance readiness expenses,
secondary offering expenses incurred and stamp duty on transfer of
shares), divided by weighted average number of shares outstanding -
diluted.
Free cash flow is the Company’s net cash from/(used in)
operating activities, plus grants received, less net purchases of
non-current assets (tangible and intangible).
In order for Endava’s investors to be better able to compare its
current period results with those of previous periods, the Company
has shown a reconciliation of IFRS to non-IFRS financial measures.
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.
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," and
other similar terms and phrases. Such forward-looking statements
include, but are not limited to, the statements regarding our
projected financial performance for our fourth fiscal quarter and
full-fiscal year 2019. 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:
our ability to sustain our revenue growth rate in the future; our
ability to retain existing clients and attract new clients,
including our ability to increase revenue from existing clients and
diversify our revenue concentration; our ability to attract and
retain highly-skilled IT professionals at cost-effective rates; our
ability to penetrate new industry verticals and geographies and
grow our revenue in current industry verticals and geographies; our
ability to maintain favorable pricing and utilization rates; our
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 our market; the size
of our addressable market and market trends; our ability to adapt
to technological change and innovate solutions for our clients; our
plans for growth and future operations, including our ability to
manage our growth; our expectations of future operating results or
financial performance; our ability to effectively manage our
international operations, including our exposure to foreign
currency exchange rate fluctuations; and our 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 our Annual
Report on Form 20-F filed with the Securities and Exchange
Commission on October 11, 2018 and the final prospectus relating to
our recent public offering filed with the Securities and Exchange
Commission pursuant to Rule 424(b)(4) on April 18, 2019.
In addition, the forward-looking statements included in this
press release represent our views and expectations as of the date
hereof and are based on information currently available to us. We
anticipate that subsequent events and developments may cause our
views to change. However, while we may elect to update these
forward-looking statements at some point in the future, we
specifically disclaim any obligation to do so except as required by
law. These forward-looking statements should not be relied upon as
representing our views as of any date subsequent to the date
hereof.
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
Nine Months Ended March 31 Three Months Ended
March 31 2019 2018 2019
2018 £’000 £’000 £’000
£’000 REVENUE 211,312 156,140
73,064 58,598 Cost of sales
Direct cost of sales (127,356) (96,104) (44,330) (35,783)
Allocated cost of sales (11,050 ) (9,281 ) (3,745 ) (3,235 ) Total
cost of sales (138,406 ) (105,385 ) (48,075 ) (39,018 )
GROSS
PROFIT 72,906 50,755 24,989
19,580 Selling, general and administrative
expenses (48,609 ) (31,755 ) (17,601 ) (13,705 )
OPERATING
PROFIT 24,297 19,000 7,388
5,875 Net finance (expense) / income (4,644 )
(1,030 ) 216 (370 )
PROFIT BEFORE TAX 19,653
17,970 7,604 5,505 Tax on
profit on ordinary activities (3,874) (3,893) (1,290) (1,286)
PROFIT FOR THE PERIOD AND PROFIT ATTRIBUTABLE TO OWNERS OF THE
PARENT 15,779 14,077 6,314
4,219 Other comprehensive income
Items that may be reclassified subsequently to profit
or loss: Exchange differences on
translating foreign operations (2,365) (1,108) (3,027) (1,363)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO OWNERS
OF THE PARENT 13,414 12,969
3,287 2,856 EARNINGS PER
SHARE: Weighted average number of
shares outstanding - Basic 49,072,773 45,100,165
49,500,875 45,100,165 Weighted average number of
shares outstanding - Diluted 54,648,204 50,050,447
54,912,822 51,142,347 Basic EPS (£) 0.32 0.31 0.13
0.09 Diluted EPS (£) 0.29 0.28 0.11 0.08
CONDENSED CONSOLIDATED BALANCE
SHEETS
March 31, 2019 June 30, 2018 March 31,
2018 £’000 £’000 £’000
ASSETS - NON-CURRENT
Goodwill 41,197 41,062 39,267
Intangible assets 28,800 30,787 30,051
Property, plant and equipment 9,359 8,584 8,350
Deferred tax assets 4,731 2,488 926
TOTAL 84,087 82,921
78,594 ASSETS - CURRENT
Inventories
-
16 57 Trade and other receivables 63,041
52,352 50,190 Corporation tax receivable 649
677
-
Cash and cash equivalents 59,339 15,048 9,462
TOTAL 123,029 68,093
59,709 TOTAL ASSETS 207,116
151,014 138,303 LIABILITIES -
CURRENT Borrowings 29 19,744
23,612 Trade and other payables 43,983 40,243
32,843 Corporation tax payable 2,045 1,488 644
Contingent consideration 1,211 5,259 4,947
Deferred consideration 1,516 4,401 2,851
Other liabilities 248
-
-
TOTAL 49,032 71,135
64,897 LIABILITIES - NON CURRENT
Borrowings 1 20 34 Contingent
consideration
-
7,251 6,751 Deferred consideration
-
-
1,238 Deferred tax liabilities 2,380 2,832
2,621 Other liabilities 67 277 267
TOTAL 2,448 10,380
10,911 EQUITY Share
capital 1,085 996 996 Share premium 16,451
2,678 2,678 Merger relief reserve 4,430
4,430 4,430 Retained earnings 133,219 59,260
52,959 Other reserves 2,692 4,410 3,707
Investment in own shares (2,241 ) (2,275 ) (2,275 )
TOTAL 155,636 69,499
62,495 TOTAL LIABILITIES AND EQUITY
207,116 151,014 138,303
CONDENSED CONSOLIDATED STATEMENTS OF
CASH FLOWS
Nine Months Ended Three Months Ended March
31 March 31 2019 2018 2019
2018 £’000 £’000 £’000
£’000 OPERATING ACTIVITIES Profit for the
period 15,779 14,077 6,314
4,219 Income tax charge 3,874 3,893
1,290 1,286 Non-cash adjustments 18,270
4,453 4,965 1,781 Tax paid (3,641 ) (3,688 )
(730 ) (1,414 ) UK research and development credit received 1,278
1,854 1,278
-
Net changes in working capital (11,271 ) (215 ) (493 ) 2,074
Net cash from operating activities 24,289
20,374 12,624 7,946 INVESTING
ACTIVITIES Purchase of non-current
assets (tangibles and intangibles) (5,153 ) (3,680 ) (1,189 ) (919
) Proceeds from disposal of non-current assets 33 2 8
8 Acquisition of business / subsidiaries (net of cash
acquired) (3,142 ) (25,423 ) (3,142 ) (8,031 ) Interest received
286 30 160 7
Net cash used in investing
activities (7,976 ) (29,071 )
(4,163 ) (8,935 ) FINANCING
ACTIVITIES Proceeds from borrowings
3,500 22,979
-
-
Repayment of borrowings (23,538 ) (28,094 ) (12 ) (14,451 )
Interest paid (280 ) (413 ) (58 ) (210 ) Grant received 1,784
147
-
147 Net proceeds from initial public offering 44,828
-
-
-
Issue of shares 85
-
85
-
Net cash from financing activities 26,379
(5,381 ) 15 (14,514 ) Net
change in cash and cash equivalents 42,692
(14,078 ) 8,476 (15,503 )
Cash and cash equivalents at the beginning of the period
15,048 23,571 51,044
25,066 Exchange differences on cash and cash
equivalents 1,599 (31 ) (181 ) (101 )
Cash and cash
equivalents at the end of the period 59,339 9,462
59,339 9,462 RECONCILIATION
OF ADJUSTED FINANCIAL MEASURES TO COMPARABLE IFRS FINANCIAL
MEASURES RECONCILIATION OF REVENUE GROWTH RATE AT
CONSTANT CURRENCY TO REVENUE GROWTH RATE AS REPORTED UNDER
IFRS: Nine Months ended Three Months ended
March 31 March 31 2019
2018 2019 2018 REVENUE GROWTH RATE
AT CONSTANT CURRENCY 34.4 % 34.6 %
23.2 % 39.6 % Foreign exchange rates
impact
0.9 % (0.4 %) 1.5
% (3.0 %) REVENUE GROWTH RATE AS REPORTED
UNDER IFRS 35.3 % 34.2 %
24.7 % 36.6 %
RECONCILIATION OF ADJUSTED PROFIT
BEFORE TAX AND ADJUSTED PROFIT FOR THE PERIOD:
Nine Months Ended Three Months Ended March
31 Mar 31 2019 2018 2019
2018 £’000 £’000 £’000
£’000 PROFIT BEFORE
TAX 19,653 17,970 7,604
5,505 Adjustments:
Share-based compensation expense 8,690 1,026
3,680 306 Amortisation of acquired intangible assets
2,609 1,804 857 844 Foreign currency
exchange (gains) losses, net (1,262 ) 545 (121 ) 64
Initial public offering expenses incurred 1,055 2,472
-
1,787 Sarbanes-Oxley compliance readiness expenses
incurred 1,227
-
529
-
Fair value movement of contingent consideration 5,805
-
-
-
Secondary offering expenses incurred 306
-
306
-
Stamp duty on transfer of shares 385
-
385
-
Total adjustments 18,815 5,847
5,636 3,001 ADJUSTED PROFIT
BEFORE TAX 38,468 23,817
13,240 8,506
PROFIT FOR THE PERIOD 15,779
14,077 6,314 4,219
Adjustments: Adjustments to
profit before tax
18,815 5,847
5,636 3,001 Tax impact of adjustments
(3,661 ) (745 ) (1,312 )
(359 ) ADJUSTED PROFIT FOR THE PERIOD
30,933 19,179 10,638
6,861 Diluted EPS (£) 0.29
0.28 0.11 0.08 Adjusted diluted EPS (£)
0.57 0.38 0.19 0.13
RECONCILIATION OF NET CASH FROM
OPERATING ACTIVITIES TO FREE CASH FLOW
Nine Months Ended Three Months Ended
March 31 March 31 2019 2018
2019 2018 £’000 £’000
£’000 £’000 Net
cash from operating activities 24,289
20,374 12,624 7,946
Adjustments: Grant received
1,784 147
-
147 Net purchases of non-current assets (tangible and
intangible) (5,120 ) (3,678 ) (1,181 ) (911 )
Free cash flow
20,953 16,843 11,443
7,182 SUPPLEMENTARY
INFORMATION SHARE-BASED COMPENSATION
EXPENSE Nine Months Ended Three Months
Ended March 31 March 31 2019
2018 2019 2018 £’000
£’000 £’000 £’000
Direct cost of sales 3,587 686 1,648
205 Selling, general and administrative expenses 5,103 340
2,032 101
Total 8,690 1,026
3,680 306
DEPRECIATION AND AMORTIZATION
Nine Months Ended Three Months Ended March
31 March 31 2019 2018
2019 2018 £’000 £’000
£’000 £’000 Direct
cost of sales 2,870 2,371 1,011 821 Selling,
general and administrative expenses 3,030 2,081 972
944
Total 5,900 4,452 1,983
1,765
EMPLOYEES, TOP 10 CUSTOMERS and REVENUE
SPLIT
Nine Months Ended Three Months Ended
March 31 March 31 2019
2018 2019 2018
Closing number of total employees 5,573
4,700 5,573 4,700 Average operational
employees 4,821 3,829 5,012 4,246
Top 10 customers % 36 % 43
% 40 % 40 % Number of clients
with > £1m of revenue(rolling 12 months) 67 42 67 42
Geographic split of revenue %
North America 27 % 19 % 27 % 25 %
Europe 28 % 35 % 27 % 31 % UK 45 % 46 % 46 % 44 %
Industry
vertical split of revenue %
Payments and Financial Services 53 % 58 % 53 % 54 % TMT 27 % 28 %
28 % 29 % Other 20 % 14 % 19 % 17 %
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190521005465/en/
INVESTOR CONTACT:Endava PlcLaurence Madsen, Investor
Relations ManagerInvestors@endava.com
Endava (NYSE:DAVA)
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