Q4 FY2019
24.6% Year on Year Revenue Growth to £76.6
million
22.7% Revenue Growth at Constant
Currency
IFRS diluted EPS £0.15 compared to £0.10 in
the prior year comparative period
Adjusted diluted EPS £0.20 compared to £0.15
in the prior year comparative period
FY2019
32.3%Year on Year Revenue Growth to £287.9
million
31.1% Revenue Growth at Constant
Currency
IFRS diluted EPS £0.44 compared to £0.38 in
the prior year
Adjusted diluted EPS £0.76 compared to £0.53
in the prior year
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, 2019, the fourth quarter of its 2019
fiscal year ("Q4 FY2019") and for the Fiscal Year ended June 30,
2019 ("FY2019").
"We just completed our first year as a public company and I
could not be more pleased with our performance as we continue to
grow in all of our verticals and all of our geographies. Our
revenue for Q4 FY2019 was £76.6 million, an impressive increase of
24.6% Year on Year on a reported basis from £61.5 million in the
same quarter in the prior year. For FY2019, our revenue
totalled
£287.9 million a 32.3% Year on Year growth." said John
Cotterell, Endava’s CEO.
FOURTH QUARTER OF FISCAL 2019 FINANCIAL HIGHLIGHTS:
- Revenue for Q4 FY2019 was £76.6 million, an increase of 24.6%
compared to £61.5 million in the same period in the prior
year.
- Revenue growth rate at constant currency (a non-IFRS measure)
was 22.7% for Q4 FY2019 compared to 44.2% in the same period in the
prior year.
- Profit before tax for Q4 FY2019 was £10.4 million compared to
£6.7 million in the same period in the prior year, or 13.6% of
revenue compared to 10.9% in the same period in the prior
year.
- Adjusted profit before tax (a non-IFRS measure) for Q4 FY2019
was £13.5 million compared to £9.7 million in the same period in
the prior year, or 17.6% of revenue compared to 15.7% in the same
period in the prior year.
- Profit for the period was £8.2 million in Q4 FY2019, resulting
in a diluted EPS of £0.15, compared to profit for the period of
£4.9 million and diluted EPS of £0.10 in the same period in the
prior year.
- Adjusted profit for the period (a non-IFRS measure) was £11.0
million in Q4 FY2019, resulting in adjusted diluted EPS (a non-IFRS
measure) of £0.20 compared to adjusted profit for the period of
£7.6 million and adjusted diluted EPS of £0.15 in the same period
in the prior year.
FISCAL YEAR 2019 FINANCIAL HIGHLIGHTS:
- Revenue for FY2019 was £287.9 million, an increase of 32.3%
compared to £217.6 million in the prior year.
- Revenue growth rate at constant currency (a non-IFRS measure)
was 31.1% for FY2019 compared to 37.2% in the prior year.
- Profit before tax for FY2019 was £30.1 million compared to
£24.7 million in the prior year, or 10.5% of revenue compared to
11.3% in the prior year.
- Adjusted profit before tax (a non-IFRS measure) for FY2019 was
£52.0 million compared to £33.5 million in the prior year, or 18.0%
of revenue compared to 15.4% in the prior year.
- Profit for the year was £24.0 million in FY2019, resulting in a
diluted EPS of £0.44, compared to profit for the year of £19.0
million and diluted EPS of £0.38 in the prior year.
- Adjusted profit for the year (a non-IFRS measure) was £41.9
million in FY2019, resulting in adjusted diluted EPS (a non-IFRS
measure) of £0.76 compared to adjusted profit for the year of £26.8
million and adjusted diluted EPS of £0.53 in the prior year.
CASH FLOW:
- Net cash from operating activities was £11.1 million in Q4
FY2019 compared to £13.6 million in the same period in the prior
year.
- Net cash from operating activities was £35.3 million in FY2019
compared to £34.0 million in the prior year.
- Adjusted free cash flow (a non-IFRS measure) was £8.9 million
in Q4 FY2019 compared to £11.9 million in the same period in the
prior year.
- Adjusted free cash flow (a non-IFRS measure) was £29.8 million
in FY2019 compared to £28.7 million in the prior year.
- At June 30, 2019, Endava had cash and cash equivalents of £70.2
million compared to £15.0 million at June 30, 2018. Net cash at
June 30, 2019 was £70.2 million compared to net borrowing of £4.7
million at June 30, 2018.
OTHER METRICS FOR THE QUARTER ENDED JUNE 30, 2019
- Headcount reached 5,754 at June 30, 2019, with 5,143 average
operational employees in Q4 FY2019, compared to a headcount of
4,819 at June 30, 2018 and 4,340 average operational employees in
the same period in the prior year.
- Number of clients with over £1 million in spend grew to 63 on a
rolling twelve months basis at June 30, 2019 compared to 46 at June
30, 2018.
- Top 10 clients accounted for 40% of revenue in Q4 FY2019,
compared to 39% in the same period in the prior year.
- By geographic region, 28% of revenue was generated in North
America, 27% was generated in Europe and 45% was generated in the
United Kingdom in Q4 FY2019. This compares to 26% in North America,
31% in Europe and 43% in the United Kingdom in the same period in
the prior year.
- By industry vertical, 52% of revenue was generated from
Payments and Financial Services, 28% from TMT and 20% from Other.
This compares to 53% Payments and Financial Services, 28% TMT and
19% Other in the same period in the prior year.
OTHER METRICS FOR THE FISCAL YEAR ENDED JUNE 30, 2019
- Headcount reached 5,754 at June 30, 2019, with 4,902 average
operational employees in FY2019, compared to a headcount of 4,819
at June 30, 2018 and 3,957 average operational employees in the
prior year.
- Number of clients with over £1 million in spend grew to 63 at
June 30, 2019 compared to 46 at June 30, 2018.
- Top 10 clients accounted for 38% of revenue in FY2019, compared
to 42% in the prior year.
- By geographic region, 27% of revenue was generated in North
America, 28% was generated in Europe and 45% was generated in the
United Kingdom in FY2019. This compares to 21% in North America,
34% in Europe and 45% in the United Kingdom in the prior year.
- By industry vertical, 53% of revenue was generated from
Payments and Financial Services,27% from TMT and 20% from Other.
This compares to 57% Payments and Financial Services, 28% TMT and
15% from Other in the prior year.
FOURTH QUARTER OF FISCAL YEAR 2019 BUSINESS
HIGHLIGHTS:
Pursuant to an agreement that we entered into with Worldpay in
November 2016, we granted Worldpay an option to acquire a captive
Romanian subsidiary that we created and staffed for Worldpay. On
June 1, 2019, we entered into an agreement to sell the captive to
Worldpay and to terminate the option and transfer agreement, and on
August 31, 2019 the transaction was completed.
OUTLOOK
First Quarter Fiscal Year 2020:
We expect revenues will be in the range £81.0m to £ 81.8m,
representing constant currency growth of between 20.0% and 21.0%.
We expect adjusted diluted EPS to be in the range of £0.21 to £0.22
per share.
Full Fiscal Year 2020:
We expect revenues will be in the range £346.0m to £348.0m,
representing constant currency growth of between 20.0% and 21.0%.
We expect adjusted diluted EPS to be in the range of £0.85 to £0.88
per share.
Our guidance regarding constant currency growth is pro-forma for
the sale of the Captive which closed on August 31, 2019.
Endava is not able, at this time, to provide an outlook for IFRS
diluted EPS for Q1 FY2020 or FY2020 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,
September 25, 2019, to review its Q4 FY2019 and FY2019 results. To
participate in Endava’s Q4 FY19 and FY2019 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 7067127.
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, October 11,
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 5,754 employees as of June 30, 2019 located in offices
in North America and Western Europe and delivery centres in
Romania, Moldova, Bulgaria, Serbia, North 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 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 rates in
effect for the fiscal quarter ended June 30, 2018 were used to
convert revenue for the fiscal quarter ended June 30, 2019 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, realized and unrealized foreign currency
exchange gains and losses, initial public offering expenses
incurred, Sarbanes-Oxley compliance readiness expenses incurred,
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 incurred, secondary offering expenses
incurred and stamp duty on transfer of shares). 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).
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 first fiscal quarter and
fiscal year 2020. 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 favourable 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 September 25, 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.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Twelve Months Ended
June 30
Three Months Ended
June 30
2019
2018
2019
2018
£’000
£’000
£’000
£’000
REVENUE
287,930
217,613
76,618
61,473
Cost of sales
Direct cost of sales
(174,152)
(132,775)
(46,796)
(36,671)
Allocated cost of sales
(14,951
)
(12,668
)
(3,901
)
(3,387
)
Total cost of sales
(189,103
)
(145,443
)
(50,697
)
(40,058
)
GROSS PROFIT
98,827
72,170
25,921
21,415
Selling, general and administrative
expenses
(65,857
)
(46,737
)
(17,248
)
(14,982
)
OPERATING PROFIT
32,970
25,433
8,673
6,433
Net finance (expense) / income
(2,870
)
(783
)
1,774
247
PROFIT BEFORE TAX
30,100
24,650
10,447
6,680
Tax on profit on ordinary activities
(6,093)
(5,675)
(2,219)
(1,782)
PROFIT FOR THE PERIOD AND PROFIT
ATTRIBUTABLE TO OWNERS OF THE PARENT
24,007
18,975
8,228
4,898
Other comprehensive income
Items that may be reclassified
subsequently to profit or loss:
Exchange differences on translating
foreign operations
(5,987)
(409)
(3,622)
699
TOTAL COMPREHENSIVE INCOME FOR THE
PERIOD ATTRIBUTABLE TO OWNERS OF THE PARENT
18,020
18,566
4,606
5,597
EARNINGS PER SHARE:
Weighted average number of shares
outstanding - Basic
50,116,979
45,100,165
52,370,444
45,100,165
Weighted average number of shares
outstanding - Diluted
55,026,223
50,426,216
55,195,272
51,266,396
Basic EPS (£)
0.48
0.42
0.16
0.11
Diluted EPS (£)
0.44
0.38
0.15
0.10
CONSOLIDATED BALANCE SHEETS
June 30, 2019
June 30, 2018
£’000
£’000
ASSETS - NON-CURRENT
Goodwill
36,760
41,062
Intangible assets
28,910
30,787
Property, plant and equipment
10,579
8,584
Deferred tax assets
9,550
2,488
TOTAL
85,799
82,921
ASSETS - CURRENT
Inventories
—
16
Trade and other receivables
65,917
52,352
Corporation tax receivable
790
677
Cash and cash equivalents
70,172
15,048
TOTAL
136,879
68,093
TOTAL ASSETS
222,678
151,014
LIABILITIES - CURRENT
Borrowings
21
19,744
Trade and other payables
48,502
40,243
Corporation tax payable
2,920
1,488
Contingent consideration
1,244
5,259
Deferred consideration
1,516
4,401
TOTAL
54,203
71,135
LIABILITIES - NON CURRENT
Borrowings
—
20
Contingent consideration
—
7,251
Deferred tax liabilities
2,033
2,832
Other liabilities
113
277
TOTAL
2,146
10,380
EQUITY
Share capital
1,089
996
Share premium
17,271
2,678
Merger relief reserve
4,430
4,430
Retained earnings
146,963
59,260
Other reserves
(1,577
)
4,410
Investment in own shares
(1,847
)
(2,275
)
TOTAL
166,329
69,499
TOTAL LIABILITIES AND EQUITY
222,678
151,014
CONSOLIDATED STATEMENTS OF CASH FLOWS
Twelve Months Ended
June
30
Three Months Ended
June
30
2019
2018
2019
2018
£’000
£’000
£’000
£’000
OPERATING ACTIVITIES
Profit for the period
24,007
18,975
8,228
4,898
Income tax charge
6,093
5,675
2,219
1,782
Non-cash adjustments
21,390
6,249
3,120
1,796
Tax paid
(5,904
)
(5,608
)
(2,263
)
(1,920
)
UK research and development credit
received
1,278
1,854
—
—
Net changes in working capital
(11,516
)
6,839
(245
)
7,054
Net cash from operating
activities
35,348
33,984
11,059
13,610
INVESTING ACTIVITIES
Purchase of non-current assets (tangibles
and intangibles)
(7,383
)
(5,483
)
(2,230
)
(1,803
)
Proceeds from disposal of non-current
assets
57
79
24
77
Acquisition of business / subsidiaries
(net of cash acquired)
(3,201
)
(28,765
)
(59
)
(1,089
)
Cash and cash equivalents acquired with
subsidiaries
—
2,342
—
89
Interest received
476
35
190
5
Net cash used in investing
activities
(10,051
)
(31,792
)
(2,075
)
(2,721
)
FINANCING ACTIVITIES
Proceeds from borrowings
3,500
26,462
—
3,483
Repayment of borrowings
(23,547
)
(36,768
)
(9
)
(8,674
)
Interest paid
(343
)
(573
)
(63
)
(160
)
Grant received
1,784
147
—
—
Net proceeds from initial public
offering
44,828
—
—
—
Issue of shares
133
—
48
—
Net cash from financing
activities
26,355
(10,732
)
(24
)
(5,351
)
Net change in cash and cash
equivalents
51,652
(8,540
)
8,960
5,538
Cash and cash equivalents at the
beginning of the period
15,048
23,571
59,339
9,462
Exchange differences on cash and cash
equivalents
3,472
17
1,873
48
Cash and cash equivalents at the end of
the period
70,172
15,048
70,172
15,048
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:
Twelve Months ended
June
30
Three Months ended
June
30
2019
2018
2019
2018
REVENUE GROWTH RATE AT CONSTANT
CURRENCY
31.1%
37.2%
22.7%
44.2%
Foreign exchange rates impact
1.2%
(0.7%)
1.9%
(1.4%)
REVENUE GROWTH RATE AS REPORTED UNDER
IFRS
32.3%
36.5%
24.6%
42.8%
RECONCILIATION OF ADJUSTED PROFIT BEFORE TAX AND ADJUSTED
PROFIT FOR THE PERIOD:
Twelve Months Ended
June
30
Three Months Ended
June
30
2019
2018
2019
2018
£’000
£’000
£’000
£’000
PROFIT BEFORE TAX
30,100
24,650
10,447
6,680
Adjustments:
Share-based compensation expense
12,022
1,505
3,332
479
Amortisation of acquired intangible
assets
3,472
2,653
863
849
Foreign currency exchange (gains) losses,
net
(2,945
)
17
(1,683
)
(528
)
Initial public offering expenses
incurred
1,055
4,537
—
2,065
Sarbanes-Oxley compliance readiness
expenses incurred
1,440
106
213
106
Fair value movement of contingent
consideration
5,805
—
—
—
Secondary offering expenses incurred
1,009
—
703
—
Stamp duty on transfer of shares
10
—
(375
)
—
Total adjustments
21,868
8,818
3,053
2,971
ADJUSTED PROFIT BEFORE TAX
51,968
33,468
13,500
9,651
PROFIT FOR THE PERIOD
24,007
18,975
8,228
4,898
Adjustments:
Adjustments to profit before tax
21,868
8,818
3,053
2,971
Tax impact of adjustments
(3,969
)
(976
)
(308
)
(231
)
ADJUSTED PROFIT FOR THE PERIOD
41,906
26,817
10,973
7,638
Diluted EPS (£)
0.44
0.38
0.15
0.10
Adjusted diluted EPS (£)
0.76
0.53
0.20
0.15
RECONCILIATION OF NET CASH FROM OPERATING ACTIVITIES TO
ADJUSTED FREE CASH FLOW
Twelve Months Ended
June
30
Three Months Ended
June
30
2019
2018
2019
2018
£’000
£’000
£’000
£’000
Net cash from operating
activities
35,348
33,984
11,059
13,610
Adjustments:
Grant received
1,784
147
—
—
Net purchases of non-current assets
(tangible and intangible)
(7,326
)
(5,404
)
(2,206
)
(1,726
)
Adjusted free cash flow
29,806
28,727
8,853
11,884
SUPPLEMENTARY INFORMATION
SHARE-BASED COMPENSATION EXPENSE
Twelve Months Ended
June
30
Three Months Ended
June
30
2019
2018
2019
2018
£’000
£’000
£’000
£’000
Direct cost of sales
5,724
1,006
2,137
320
Selling, general and administrative
expenses
6,298
499
1,195
159
Total
12,022
1,505
3,332
479
DEPRECIATION AND AMORTIZATION
Twelve Months Ended
June 30
Three Months Ended
June 30
2019
2018
2019
2018
£’000
£’000
£’000
£’000
Direct cost of sales
3,841
3,226
971
855
Selling, general and administrative
expenses
4,059
3,043
1,028
962
Total
7,900
6,269
1,999
1,817
EMPLOYEES, TOP 10 CUSTOMERS and REVENUE SPLIT
Twelve Months Ended
June
30
Three Months Ended
June
30
2019
2018
2019
2018
Closing number of total
employees
5,754
4,819
5,754
4,819
Average operational employees
4,902
3,957
5,143
4,340
Top 10 customers %
38%
42%
40%
39%
Number of clients with > £1m of revenue
(rolling 12 months)
63
46
63
46
Geographic split of revenue %
North America
27%
21%
28%
26%
Europe
28%
34%
27%
31%
UK
45%
45%
45%
43%
Industry vertical split of revenue
%
Payments and Financial Services
53%
57%
52%
53%
TMT
27%
28%
28%
28%
Other
20%
15%
20%
19%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190925005458/en/
INVESTOR CONTACT: Endava Plc Laurence Madsen, Investor
Relations Manager Investors@endava.com
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