UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the Month of February 2024
Commission File Number: 001-38607
ENDAVA PLC
(Name of Registrant)
125 Old Broad Street
London EC2N 1AR
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
x Form 20-F ¨ Form 40-F
INFORMATION CONTAINED IN THIS REPORT ON FORM 6-K
Press Release and Investor Deck
On February 29, 2024, Endava plc (the “Company”) issued press releases announcing (i) its financial results for the second quarter ended December 31, 2023 and (ii) the acquisition of GalaxE Group, Inc. by the Company. Copies of these press releases are attached hereto as Exhibits 99.1 and 99.3, respectively. Additionally, the Company posted an updated investor presentation, which is attached hereto as Exhibit 99.2. The updated corporate presentation is available in the “News and Events” section of the Company’s website at www.endava.com, and will be used by the Company from time to time at investor conferences and in meetings with investors and others beginning on February 29, 2024.
INCORPORATION BY REFERENCE
Exhibits 99.1, other than the portions of Exhibit 99.1 under the caption "Outlook," and 99.3 are hereby expressly incorporated by reference into the registrant’s registration statement on Form F-3 (File No. 333-229213) and registration statements on Form S-8 (File Nos. 333-228717, 333-248904, 333-259900, 333-268067 and 333-274571), and any related prospectuses, as such registration statements may be amended from time to time, and to be a part thereof from the date on which this report is filed, to the extent not superseded by documents or reports subsequently filed or furnished.
EXHIBIT LIST
| | | | | | | | |
| Exhibit | | Description |
| 99.1 | | |
| 99.2 | | |
| 99.3 | | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | | | | | | | |
| | | |
| | ENDAVA PLC |
| | | |
| Date: February 29, 2024 | | By: | /s/ John Cotterell |
| | | Name: John Cotterell |
| | | Title: Chief Executive Officer |
ENDAVA ANNOUNCES SECOND QUARTER FISCAL YEAR 2024 RESULTS
Q2 FY2024
10.6% Year on Year Revenue Decrease to £183.6 million
8.1% Revenue Decrease at Constant Currency
Diluted EPS £0.14 compared to £0.26 in the prior year comparative period
Adjusted diluted EPS £0.30 compared to £0.59 in the prior year comparative period
London, U.K. – Endava plc (NYSE: DAVA) ("Endava" or the "Company"), a leading technology services company combining world-class engineering, industry expertise and a people-centric mindset, today announced results for the three months ended December 31, 2023, the second quarter of its 2024 fiscal year ("Q2 FY2024").
"Our results for Q2 FY2024 were in line with our prior guidance, with a revenue decrease of 8.1% in constant currency year over year. The uncertain economic environment continues to impact near-term client decision making. We now have numerous projects where discovery work has been done, but clients are hesitating on when to commit to sizeable spend needed to build production-ready systems. This said, we believe we have a very well positioned and strong business and are confident that despite current softness in demand, in the longer term, the opportunity for us is very attractive. Additionally, I am thrilled to announce today our acquisition of GalaxE Solutions, a leading provider of digital transformation and product development services to blue chip US companies mainly in Healthcare with delivery from India,” said John Cotterell, Endava's CEO.
SECOND QUARTER FISCAL YEAR 2024 FINANCIAL HIGHLIGHTS:
•Revenue for Q2 FY2024 was £183.6 million, a decrease of 10.6% compared to £205.2 million in the same period in the prior year.
•Revenue decrease at constant currency (a non-IFRS measure)* was 8.1% for Q2 FY2024, compared to growth of 23.4% in the same period in the prior year.
•Profit before tax for Q2 FY2024 was £10.6 million, compared to £20.3 million in the same period in the prior year.
•Adjusted profit before tax (a non-IFRS measure)* for Q2 FY2024 was £22.7 million, or 12.4% of revenue, compared to £43.0 million, or 20.9% of revenue, in the same period in the prior year.
•Profit for the period was £8.3 million, resulting in a diluted earnings per share ("EPS") of £0.14, compared to profit of £15.0 million and diluted EPS of £0.26 in the same period in the prior year.
•Adjusted profit for the period (a non-IFRS measure)* was £17.5 million, resulting in adjusted diluted EPS (a non-IFRS measure)* of £0.30, compared to adjusted profit for the period of £34.3 million and adjusted diluted EPS of £0.59 in the same period in the prior year.
CASH FLOW:
•Net cash from operating activities was £35.0 million in Q2 FY2024, compared to £40.9 million in the same period in the prior year.
•Adjusted free cash flow (a non-IFRS measure)* was £33.6 million in Q2 FY2024, compared to £37.0 million in the same period in the prior year.
•At December 31, 2023, Endava had cash and cash equivalents of £198.6 million, compared to £164.7 million at June 30, 2023.
* 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 DECEMBER 31, 2023:
•Headcount totaled 11,539 at December 31, 2023, with an average of 10,461 operational employees in Q2 FY2024, compared to a headcount of 12,183 at December 31, 2022 and an average of 11,107 operational employees in Q2 FY2023.
•Number of clients with over £1 million in revenue on a rolling twelve-month basis was 150 at December 31, 2023, compared to 156 clients at December 31, 2022.
•Top 10 clients accounted for 34% of revenue in Q2 FY2024, compared to 31% in the same period in the prior year.
•By geographic region, 31% of revenue was generated in North America, 26% was generated in Europe, 34% was generated in the United Kingdom and 9% was generated in the rest of the world in Q2 FY2024. This compares to 33% in North America, 23% in Europe, 39% in the United Kingdom and 5% in the Rest of the World in the same period in the prior year.
•By industry vertical, 26% of revenue was generated from Payments, 14% from Banking and Capital Markets (BCM), 8% from Insurance, 23% from Technology, Media and Telecommunications (TMT), 11% from Mobility, and 18% from Other in Q2 FY2024. This compares to 29% from Payments, 17% from BCM, 7% from Insurance, 22% from TMT, 10% from Mobility, and 15% from Other in the same period in the prior year.
OUTLOOK:
Third Quarter Fiscal Year 2024:
Endava expects revenue will be in the range of £174.0 million to £176.0 million, representing a constant currency revenue decrease of between 12.0% and 11.0% on a year over year basis. Endava expects adjusted diluted EPS to be in the range of £0.17 to £0.19 per share.
Full Fiscal Year 2024:
Endava expects revenue will be in the range of £722.0 million to £735.0 million, representing a constant currency revenue decrease of between 7.0% and 5.0% on a year over year basis. Endava expects adjusted diluted EPS to be in the range of £1.09 to £1.22 per share.
This above guidance for the third quarter and full fiscal year 2024 assumes the exchange rates on January 31, 2024 (when the exchange rate was 1 British Pound to 1.27 US Dollar and 1.17 Euro).
Endava is not able, at this time, to reconcile its expectations for the third quarter and full fiscal year 2024 for a rate of revenue decrease 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, a 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 February 29, 2024, Endava announced it has entered into a definitive agreement to acquire 100% ownership of GalaxE Group, Inc. (“GalaxE”) headquartered in New Jersey, United States. When completed, the transaction will add approximately 1,650 employees to Endava and provide several key strategic benefits to Endava: (1) Significantly expands Endava’s footprint in North America; (2) Provide deep domain expertise in the U.S. Healthcare market; (3) Establishes Endava’s delivery operations in India and (4) Complementary platform capabilities focused on enterprise digital transformation. Total consideration for the acquisition is $405 million, primarily in cash with some stock, of which $30 million is conditional upon future performance of the GalaxE business. The transaction is expected to close in early April 2024 subject to the completion of customary closing conditions and approvals, including the expiration of the required waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976.
On February 28, 2024, Endava and Equiniti announced the expansion of their strategic relationship. Equiniti is a leading international provider of tech-enabled shareholder, retirement and remediation services. We have established a 5-year deal of £75m net new revenue to support the delivery of their transformative product and tech roadmap. This deal strengthens Endava and Equiniti’s existing three year relationship and delivers significant growth for Endava's Capital Markets business.
CONFERENCE CALL DETAILS:
The Company will host a conference call at 8:00 am ET today, February 29, 2024, to review its Q2 FY2024 results. To participate in Endava’s Q2 FY2024 earnings conference call, please dial in at least five minutes prior to the scheduled start time (844) 481-2736 or (412) 317-0665 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 Friday, March 29, 2024.
ABOUT ENDAVA PLC:
Technology is our how. And people are our why. By combining world-class engineering, industry expertise and a people-centric mindset, we consult and partner with our customers to create technological solutions that drive innovation and transform businesses. From ideation to production, we support our customers with tailor-made solutions across various industries and all around the world.
Endava services clients in Payments, Banking and Capital Markets, Insurance, TMT, Consumer Products, Retail, Mobility and Healthcare. As of December 31, 2023, 11,539 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 Condensed Consolidated Statements of Comprehensive Income, Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Cash Flows presented in accordance with IFRS, the Company uses non-IFRS measures of certain components of financial performance in this press release. These measures include revenue (decrease)/growth rate at constant currency, adjusted profit before tax, adjusted profit for the period, adjusted diluted EPS and adjusted free cash flow.
Revenue decrease/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 December 31, 2022 were used to convert revenue for the fiscal quarter ended December 31, 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 profit for the period is defined as Adjusted PBT less the tax charge for the period adjusted for the tax impact of the adjustments to PBT.
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.
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 the uncertain economic environment and Endava’s expectations of current and prospective client demand for Endava offerings in upcoming periods; Endava's long-term opportunity; Endava's strategic partnership with Equiniti, including Endava's expectations regarding net new revenue attributable to the relationship; Endava's acquisition of GalaxE Solutions, including the overall impact on Endava's business and the timing of closing of the
transaction; and Endava’s ability to achieve its anticipated growth and future financial performance, including management's financial outlook for the third quarter and full fiscal year 2024. 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, conflict in the Middle East or if general economic conditions in Europe, the United States or the global economy worsen, including increased inflation and potential future bank failures; the perceived impact and effect of macroeconomic conditions on Endava and its customers; 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 on Form 20-F 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.
INVESTOR CONTACT:
Endava plc
Laurence Madsen, Head of Investor Relations
Investors@endava.com
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
| | | | | | | | | | | | | | |
| Six Months Ended December 31 | Three Months Ended December 31 |
| 2023 | 2022(1) | 2023 | 2022(1) |
| £’000 | £’000 | £’000 | £’000 |
| REVENUE | 371,973 | 401,410 | 183,552 | 205,241 |
| Cost of sales | | | | |
| Direct cost of sales | (259,412) | (249,253) | (132,093) | (126,282) |
| Allocated cost of sales | (13,218) | (12,243) | (6,586) | (6,460) |
| Total cost of sales | (272,630) | (261,496) | (138,679) | (132,742) |
| GROSS PROFIT | 99,343 | 139,914 | 44,873 | 72,499 |
| Selling, general and administrative expenses | (78,618) | (79,886) | (40,255) | (39,704) |
| | | | |
| OPERATING PROFIT | 20,725 | 60,028 | 4,618 | 32,795 |
| Net finance income / (expense) | 7,193 | (1,189) | 5,987 | (12,524) |
| | | | |
| PROFIT BEFORE TAX | 27,918 | 58,839 | 10,605 | 20,271 |
| Tax on profit on ordinary activities | (7,205) | (12,092) | (2,258) | (5,252) |
| PROFIT FOR THE PERIOD | 20,713 | 46,747 | 8,347 | 15,019 |
| OTHER COMPREHENSIVE INCOME | | | | |
| Items that may be reclassified subsequently to profit or loss: | | | | |
| Exchange differences on translating foreign operations | 1,869 | 823 | (2,873) | (7,157) |
| TOTAL COMPREHENSIVE INCOME / (LOSS) FOR THE PERIOD ATTRIBUTABLE TO OWNERS OF THE PARENT | 22,582 | 47,570 | 5,474 | 7,862 |
| | | | |
| EARNINGS PER SHARE (EPS): | | | | |
| Weighted average number of shares outstanding - Basic | 58,101,072 | | 56,962,777 | | 58,300,691 | | 57,219,704 | |
| Weighted average number of shares outstanding - Diluted | 58,367,296 | | 57,923,559 | | 58,602,535 | | 57,959,580 | |
| Basic EPS (£) | 0.36 | | 0.82 | | 0.14 | | 0.26 | |
| Diluted EPS (£) | 0.35 | | 0.81 | | 0.14 | | 0.26 | |
CONDENSED CONSOLIDATED BALANCE SHEETS | | | | | | | | | | | |
| December 31, 2023 | June 30, 2023 | December 31, 2022 |
| £’000 | £’000 | £’000 |
| | | |
| ASSETS - NON-CURRENT | | | |
| Goodwill | 255,749 | | 240,818 | | 189,684 | |
| Intangible assets | 61,561 | | 66,216 | | 55,114 | |
| Property, plant and equipment | 23,181 | | 25,940 | | 24,768 | |
| Lease right-of-use assets | 54,949 | | 65,084 | | 62,034 | |
| Deferred tax assets | 21,314 | | 20,156 | | 13,491 | |
| Financial assets and other receivables | 6,386 | | 5,242 | | 1,393 | |
| TOTAL | 423,140 | | 423,456 | | 346,484 | |
| ASSETS - CURRENT | | | |
| | | |
| Trade and other receivables | 170,318 | | 177,866 | | 173,750 | |
| Corporation tax receivable | 2,327 | | 4,042 | | 2,343 | |
| Financial assets | 186 | | 56 | | 226 | |
| Cash and cash equivalents | 198,602 | | 164,703 | | 185,323 | |
| TOTAL | 371,433 | | 346,667 | | 361,642 | |
| TOTAL ASSETS | 794,573 | | 770,123 | | 708,126 | |
| LIABILITIES - CURRENT | | | |
| Lease liabilities | 13,782 | | 14,573 | | 13,768 | |
| Trade and other payables | 84,678 | | 91,159 | | 96,481 | |
| Corporation tax payable | 5,103 | | 5,940 | | 4,245 | |
| Contingent consideration | 5,335 | | 7,650 | | 6,385 | |
| Deferred consideration | 2,499 | | 1,267 | | 9,858 | |
| | | |
| TOTAL | 111,397 | | 120,589 | | 130,737 | |
| LIABILITIES - NON CURRENT | | | |
| Lease liabilities | 45,645 | | 54,441 | | 53,953 | |
| Deferred tax liabilities | 13,730 | | 14,623 | | 11,021 | |
| Contingent consideration | — | | 3,809 | | — | |
| | | |
| Deferred consideration | 3,280 | | 4,837 | | 1,407 | |
| Other liabilities | 543 | | 516 | | 545 | |
| TOTAL | 63,198 | | 78,226 | | 66,926 | |
| EQUITY | | | |
| Share capital | 1,167 | | 1,155 | | 1,150 | |
| Share premium | 17,753 | | 14,625 | | 21,389 | |
| Merger relief reserve | 48,139 | | 42,805 | | 30,003 | |
| Retained earnings | 566,589 | | 522,926 | | 462,767 | |
| Other reserves | (13,644) | | (10,176) | | (4,691) | |
| Investment in own shares | (26) | | (27) | | (155) | |
| TOTAL | 619,978 | | 571,308 | | 510,463 | |
| TOTAL LIABILITIES AND EQUITY | 794,573 | | 770,123 | | 708,126 | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| | | | | | | | | | | | | | |
| Six Months Ended December 31 | Three Months Ended December 31 |
| 2023 | 2022 | 2023 | 2022 |
| £’000 | £’000 | £’000 | £’000 |
| OPERATING ACTIVITIES | | | | |
| Profit for the period | 20,713 | | 46,747 | | 8,347 | | 15,019 | |
| Income tax charge | 7,205 | | 12,092 | | 2,258 | | 5,252 | |
| Non-cash adjustments | 31,833 | | 24,974 | | 16,033 | | 18,875 | |
| Tax paid | (4,814) | | (10,047) | | (2,466) | | (8,437) | |
| | | | |
| Net changes in working capital | (3,314) | | (7,635) | | 10,864 | | 10,186 | |
| Net cash from operating activities | 51,623 | | 66,131 | | 35,036 | | 40,895 | |
| | | | | |
| INVESTING ACTIVITIES | | | | |
| Purchase of non-current assets (tangibles and intangibles) | (2,200) | | (7,591) | | (1,393) | | (4,148) | |
| (Loss) / proceeds from disposal of non-current assets | (27) | | 16 | | (30) | | (3) | |
| Payment for acquisition of subsidiary, net of cash acquired | (6,710) | | (32,397) | | (2,528) | | (32,397) | |
| Other acquisition-related settlements | (6,680) | | — | | — | | — | |
| | | | |
| Interest received | 3,522 | | 797 | | 1,957 | | 432 | |
| Net cash used in investing activities | (12,095) | | (39,175) | | (1,994) | | (36,116) | |
| | | | |
| FINANCING ACTIVITIES | | | | |
| Proceeds from sublease | 87 | | 237 | | 31 | | 92 | |
| | | | |
| | | | |
| Repayment of lease liabilities | (7,420) | | (6,491) | | (3,500) | | (3,392) | |
| Interest and debt financing costs paid | (583) | | (423) | | (296) | | (206) | |
| Grant received | 230 | | 220 | | 23 | | 220 | |
| | | | |
| | | | |
| Proceeds from exercise of options | 3,129 | | 2,266 | | 3,118 | | 2,245 | |
| Net cash used in financing activities | (4,557) | | (4,191) | | (624) | | (1,041) | |
| Net change in cash and cash equivalents | 34,971 | | 22,765 | | 32,418 | | 3,738 | |
| | | | |
| Cash and cash equivalents at the beginning of the period | 164,703 | | 162,806 | | 168,191 | | 182,395 | |
| Exchange differences on cash and cash equivalents | (1,072) | | (248) | | (2,007) | | (810) | |
| Cash and cash equivalents at the end of the period | 198,602 | | 185,323 | | 198,602 | | 185,323 | |
RECONCILIATION OF IFRS FINANCIAL MEASURES TO NON-IFRS FINANCIAL MEASURES
RECONCILIATION OF REVENUE (DECREASE)/GROWTH RATE AS REPORTED UNDER IFRS TO REVENUE GROWTH RATE AT CONSTANT CURRENCY:
| | | | | | | | | | | | | | |
| Six Months Ended December 31 | Three Months Ended December 31 |
| 2023 | 2022 | 2023 | 2022 |
| REVENUE (DECREASE) / GROWTH RATE AS REPORTED UNDER IFRS | (7.3) | % | 31.6 | % | (10.6) | % | 30.2 | % |
| Foreign exchange rates impact | 2.8 | % | (6.9) | % | 2.5 | % | (6.8) | % |
| REVENUE (DECREASE) / GROWTH RATE AT CONSTANT CURRENCY | (4.5) | % | 24.6 | % | (8.1) | % | 23.4 | % |
| | | | |
| | | | |
RECONCILIATION OF ADJUSTED PROFIT BEFORE TAX AND ADJUSTED PROFIT FOR THE PERIOD:
| | | | | | | | | | | | | | |
| Six Months Ended December 31 | Three Months Ended December 31 |
| 2023 | 2022 | 2023 | 2022 |
| £’000 | £’000 | £’000 | £’000 |
| | | | |
| PROFIT BEFORE TAX | 27,918 | | 58,839 | | 10,605 | | 20,271 | |
| Adjustments: | | | | |
| Share-based compensation expense | 23,556 | | 15,909 | | 13,617 | | 6,365 | |
| | | | |
| Amortisation of acquired intangible assets | 7,085 | | 6,207 | | 3,684 | | 3,188 | |
| Foreign currency exchange (gains) / losses, net | 2,685 | | 7,533 | | 4,764 | | 14,947 | |
| | | | |
| | | | |
| | | | |
| | | | |
| | | | |
| Restructuring costs | — | | 1,113 | | — | | 1,113 | |
| Fair value movement of contingent consideration | (8,706) | | (7,143) | | (9,942) | | (2,894) | |
| Total adjustments | 24,620 | | 23,619 | | 12,123 | | 22,719 | |
| ADJUSTED PROFIT BEFORE TAX | 52,538 | | 82,458 | | 22,728 | | 42,990 | |
| | | | |
| PROFIT FOR THE PERIOD | 20,713 | | 46,747 | | 8,347 | | 15,019 | |
| Adjustments: | | | | |
| Adjustments to profit before tax | 24,620 | | 23,619 | | 12,123 | | 22,719 | |
| Tax impact of adjustments | (4,916) | | (4,734) | | (2,977) | | (3,404) | |
| ADJUSTED PROFIT FOR THE PERIOD | 40,417 | | 65,632 | | 17,493 | | 34,334 | |
| | | | |
RECONCILIATION OF ADJUSTED DILUTED EARNINGS PER SHARE:
| | | | | | | | | | | | | | |
| Six Months Ended December 31 | Three Months Ended December 31 |
| 2023 | 2022 | 2023 | 2022 |
| £’000 | £’000 | £’000 | £’000 |
| | | | |
| DILUTED EARNINGS PER SHARE (£) | 0.35 | | 0.81 | | 0.14 | | 0.26 | |
| Adjustments: | | | | |
| Share-based compensation expense | 0.40 | | 0.27 | | 0.23 | | 0.11 | |
| Amortisation of acquired intangible assets | 0.12 | | 0.11 | | 0.06 | | 0.06 | |
| Foreign currency exchange (gains) / losses, net | 0.05 | | 0.13 | | 0.08 | | 0.26 | |
| Restructuring costs | — | | 0.02 | | — | | 0.02 | |
| Fair value movement of contingent consideration | (0.15) | | (0.14) | | (0.16) | | (0.06) | |
| Tax impact of adjustments | (0.08) | | (0.08) | | (0.05) | | (0.06) | |
| Total adjustments | 0.34 | | 0.31 | | 0.16 | | 0.33 | |
| ADJUSTED DILUTED EARNINGS PER SHARE (£) | 0.69 | | 1.12 | | 0.30 | | 0.59 | |
RECONCILIATION OF NET CASH FROM OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW
| | | | | | | | | | | | | | |
| Six Months Ended December 31 | Three Months Ended December 31 |
| 2023 | 2022 | 2023 | 2022 |
| £’000 | £’000 | £’000 | £’000 |
| | | | |
| Net cash from operating activities | 51,623 | | 66,131 | | 35,036 | | 40,895 | |
| Adjustments: | | | | |
| Grant received | 230 | | 220 | | 23 | | 220 | |
| Net purchase of non-current assets (tangible and intangible) | (2,227) | | (7,575) | | (1,423) | | (4,151) | |
| Adjusted Free cash flow | 49,626 | | 58,776 | | 33,636 | | 36,964 | |
SUPPLEMENTARY INFORMATION
SHARE-BASED COMPENSATION EXPENSE
| | | | | | | | | | | | | | |
| Six Months Ended December 31 | Three Months Ended December 31 |
| 2023 | 2022 | 2023 | 2022 |
| £’000 | £’000 | £’000 | £’000 |
| | | | |
| Direct cost of sales | 16,318 | | 10,297 | | 9,516 | | 4,340 | |
| Selling, general and administrative expenses | 7,238 | | 5,612 | | 4,101 | | 2,025 | |
| Total | 23,556 | | 15,909 | | 13,617 | | 6,365 | |
DEPRECIATION AND AMORTISATION
| | | | | | | | | | | | | | |
| Six Months Ended December 31 | Three Months Ended December 31 |
| 2023 | 2022 | 2023 | 2022 |
| £’000 | £’000 | £’000 | £’000 |
| | | | |
| Direct cost of sales | 10,049 | | 8,626 | | 4,853 | | 4,539 | |
| Selling, general and administrative expenses | 8,712 | | 7,461 | | 4,489 | | 3,843 | |
| Total | 18,761 | | 16,087 | | 9,342 | | 8,382 | |
EMPLOYEES, TOP 10 CUSTOMERS AND REVENUE SPLIT | | | | | | | | | | | | | | |
| Six Months Ended December 31 | Three Months Ended December 31 |
| 2023 | 2022 | 2023 | 2022 |
| | | | |
| Closing number of total employees (including directors) | 11,539 | 12,183 | 11,539 | 12,183 |
| Average operational employees | 10,606 | 11,031 | 10,461 | 11,107 |
| | | | |
| Top 10 customers % | 34% | 32% | 34% | 31% |
Number of clients with > £1m of revenue
(rolling 12 months) | 150 | 156 | 150 | 156 |
| | | | |
| Geographic split of revenue % | | | | |
| North America | 31% | 34% | 31% | 33% |
| Europe | 25% | 22% | 26% | 23% |
| UK | 35% | 40% | 34% | 39% |
| Rest of World (RoW) | 9% | 4% | 9% | 5% |
| Industry vertical split of revenue % | | | | |
| Payments | 27% | 30% | 26% | 29% |
| Banking and Capital Markets | 14% | 16% | 14% | 17% |
| Insurance | 8% | 7% | 8% | 7% |
| TMT | 23% | 22% | 23% | 22% |
| Mobility | 11% | 10% | 11% | 10% |
| Other | 17% | 15% | 18% | 15% |
FOOTNOTES
(1) The presentation of the income statement has been changed to no longer separately disclose the net impairment gains/(losses) on financial assets on the face of the Condensed Consolidated Statements of Comprehensive Income, but include them within Selling, general and administrative expenses.
Investor presentation Q2 FY2024
3 This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this presentation, other than statements of historical facts, are forward-looking statements. The words “believe,” “estimate,” “expect,” “may,” “will” and similar expressions are intended to identify forward-looking statements. Such forward-looking statements include, but are not limited to, the statements regarding our business strategy and our plans and objectives for future operations, our addressable market and perceived growth over next five years, our assumptions regarding industry trends, potential technological disruptions, and client demand for our services. 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 business, results of operations and financial condition may be negatively impacted by the Russian-Ukraine military conflict and related sanctions, conflict in the Middle East or if general economic conditions in Europe, the United States or the global economy worsens, including increased inflation and recent and potential future bank failures; and the perceived impact and effect of macroeconomic conditions on Endava and its customers including the March 2023 banking collapse; 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 utilisation 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; our ability to adapt to technological change and innovate solutions for our clients; our ability to collect on billed and unbilled receivables from clients; our ability to effectively manage our international operations, including our exposure to foreign currency exchange rate fluctuations; our ability to remediate the identified material weaknesses and maintain an effective system of disclosure controls and internal control over financial reporting 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 (the “SEC”) on September 19, 2023. Except as required by law, we assume no duty to update any of these forward-looking statements after the date of this presentation to conform these statements to actual results or revised expectations. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this presentation. Moreover, except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements contained in this presentation. This presentation also contains estimates and other statistical data made by independent parties and by us relating to market size and growth and other data about our industry. This data involves a number of assumptions and limitations, and you are cautioned not to give undue weight to such estimates. Neither we nor any other person makes any representation as to the accuracy or completeness of such data or undertakes any obligation to update such data after the date of this presentation. In addition, projections, assumptions and estimates of our future performance and the future performance of the markets in which we operate are necessarily subject to a high degree of uncertainty and risk. By attending or receiving this presentation you acknowledge that you will be solely responsible for your own assessment of the market and our market position and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of our business. This presentation includes non-IFRS financial measures which have certain limitations and should not be considered in isolation, or as alternatives to or substitutes for, financial measures determined in accordance with IFRS. The non-IFRS measures as defined by us may not be comparable to similar non- IFRS measures presented by other companies. Our presentation of such measures, which may include adjustments to exclude unusual or non-recurring items, should not be construed as an inference that our future results will be unaffected by these or other unusual or non-recurring items. See the IFRS to Non-IFRS Reconciliation section for a reconciliation of these non- IFRS financial measures to the most directly comparable IFRS financial measures. Disclaimer
Technology is our how. And people are our why. For over two decades, we have been harnessing technology to drive meaningful change. By combining world-class engineering, industry expertise and a people-centric mindset, we consult and partner with our customers to create technological solutions that drive innovation and transform businesses.
Opportunity & Approach 01
Investor Relations 6 We transform lives through technology. Working side by side with leading brands, we build strategies, products and solutions tailored to unique needs – regardless of industry, region or scale. By combining world-class engineering, industry expertise and a people-centric mindset, we consult and partner with our customers to create technological solutions that drive innovation and transform businesses. From ideation to production, we support our customers with bespoke solutions across various industries, including payments, insurance, finance and banking, technology, media and entertainment, telecommunications, retail and consumer goods, mobility, healthcare and life sciences, and energy and resources. Opportunity & Approach
Investor Relations Opportunity & Approach 7 Large and fast-growing market opportunity Transformation through combining innovative technologies with deep industry expertise Founder-led, experienced management team with strong culture Strong growth and financial performance Ideation to production capabilities, distributed agile at scale, domain expertise and near-shore locations
Investor Relations 8 We build on these pillars to create a positive impact We care for our customers as individuals and empower our people to be the best they can be. People-centricity We leverage the latest technologies to meet diverse customer needs, regardless of industry or scale. Technology Grasping market trends and dynamics, we tackle specific challenges with tailor-made solutions. We build strong, trusted partnerships with our customers to support them through every step of their journey. Industry expertise Trusted partnerships Opportunity & Approach
Investor Relations We serve a large addressable market. IDC Worldwide Digital Transformation Spending Guide, October 2022 update. $3.4T 2026 16.3% Five-year CAGR for digital transformation investments Opportunity & Approach 9
Investor Relations 10 9% 14% 3% 22% 52% Western Europe & EU Europe Non-EU North America Latin America APAC & MIddle East Q2FY24 Endavans by Region Endavans by Geography FY20 FY21 FY22 FY23 Q2FY23 Q2FY24 Western Europe 448 493 602 659 634 607 Central Europe - EU Countries 3,368 4,469 6,093 5,693 6,194 5,365 3,816 4,962 6,695 6,352 6,828 5,972 Central Europe - Non-EU Countries 1,810 2,361 2,842 2,689 2,873 2,551 Latin America 895 1,244 1,927 1,661 1,882 1,589 North America 103 311 348 324 375 368 APAC 5 38 1,032 221 1,052 Middle East 3 5 4 7 6,624 8,883 11,853 12,063 12,183 11,539 (5.3)% Employee decrease Q2FY23 to Q2FY24 11,539 Global employees as of December 31, 2023 37% Women in total staff as of December 31 2023 Our people are at the heart of who we are and drive our success as a business. We enable Endavans to be the best they can be through our positive working experience, ensuring everyone feels respected, included and connected to our culture. Endavans Opportunity & Approach
Investor Relations 11 Endava around the world 67 cities, 28 countries European Union Austria, Bulgaria, Croatia, Denmark, Germany, Ireland, Netherlands, Poland, Romania, Slovenia and Sweden Europe - Non-EU Bosnia & Herzegovina, Moldova, North Macedonia, Serbia, Switzerland and the United Kingdom North America Canada and the United States Latin America Argentina, Colombia, Mexico and Uruguay Asia Pacific Australia, Malaysia, Singapore and Vietnam Middle East United Arab Emirates Opportunity & Approach
Investor Relations 12 Founded in 2000 Expand to CE Concise UK, IT Consultancy Expand to USA Expand to LATAM IPO NYSE July 2018 Compudava Moldova, Nearshore Location Alpheus Germany, Consulting Business Nickelfish USA, Digital, UX & Strategy firm Velocity Partners USA & LATAM, NA Sales & LATAM Delivery PS Tech Serbia, Agile Delivery ISDC Netherlands & CE, Agile Delivery Intuitus UK, IT Consultancy Private Equity Exozet Germany, Digital Agency Comtrade Digital Services Adriatic Region, Software Engin. Services FIVE USA, Croatia, Digital Agency Levvel USA, Tech Strategy Consulting & Engineering Lexicon Australia, Tech Consulting, Design & Engineering Mudbath Australia, Tech Strategy, Design & Engineering Australia, Sweden, Vietnam, Software Solutions DEK TLM USA, Gaming Services 2024 History of Endava 11,539 Founded in 2000 60 240 1,000 2,000Headcount Q2 FY24 5,000 2024 Opportunity & Approach
Investor Relations • Modern application management • Managed cloud • Service delivery • Smart desk • Architecture • Cloud application engineering • Platform engineering • Software security • Test engineering • AR, VR, XR • Artificial intelligence • Data engineering and platforms Data and AI Advisory and digital strategy • Technology strategy • Enterprise architecture • Data strategy 13 Supported by our capabilities • Product strategy • Experience design • Growth marketing • Analytics Digital product acceleration • Agile transformation • Distributed agile delivery • Accelerated DevOps delivery • Delivery management Leading delivery Operations and OptimisationDigital engineering Opportunity & Approach
Investor Relations 14 Today Time Payments Retail / CPG HealthTech Insurance Capital Markets Mobility Technology disruption waves & convergence TMT Opportunity & Approach
Investor Relations 15 2012 2017 Now 2030 2040+20352025 Open Banking Real Time Payments Crypto Wallets Instant/Digital Issuing DLT in Cross Border Payments Closed Loop Payment Ecosystem ISO 20022 Adoption Vertically-Integrated Payments Micropayments In Car Payments Payments in Metaverse All Payments Instant No-cash Society Zero Fraud Payments Free Payments PAAS Free Acquiring Request to Pay Variable Direct Debit Cross Border Payments BNPL Embedded Finance SOFTPOS Biometric Payments CBDC No Physical Terminal Payments industry trends Opportunity & Approach
Investor Relations 16 2012 2017 Now 2030 2040+20352025 Automotive industry trends Fuel Economy Individual Car Leasing Apple CarPlay Android Auto Semi-autonomous Driving Aids Car Subscription Intelligent Routing Parking, Traffic Jam 5G New (Inductive) Charging Infrastructure In-car Payments for Electricity, Parking Tolls Payments Connected to Mobile Phone Dealerships Experience CentersCar-Sharing Ride-Hailing (Uber) Rising Adoption of Plug-in Hybrid EV “Hands Off, Mind Off” Rising Adoption of Battery EV Electric-only Drive Zones in Cities Vehicle Communication P2P Car-sharing Autonomous Traffic Management Robotaxis Zero Emissions Zero Accidents Proprietary Automotive OS Digital Sales Process Using AR & VR Usage-specific Insurance In-car Entertainment Media In-car commerce Retail Connected to Smart Cities Opportunity & Approach
Investor Relations 17 Our People / We enable our people to be the best they can be through creating a positive work environment where everyone feels respected, included and connected to our culture. Social Impact / We aim to create a positive difference for the communities where we live and work through strong strategic partnerships with non-governmental organisations (NGOs). Operating Responsibly / Our commitment to act ethically and with the highest levels of integrity enables us to retain the trust and confidence of our people, customers and investors to build a strong and sustainable business for the future. Innovation & Data Integrity / We develop smart solutions that are transforming lives through technology. By doing so, we strive to safeguard customer privacy and protect their assets by aligning with best practice industry standards. Environmental Impact / As a business, we deeply care about our impact on the world and follow sound environmental practices to help reduce our environmental footprint. brings our sustainability mission to life Opportunity & Approach
Financials02
Investor Relations Financials 19 FY19 FY20 FY21 FY22 FY23 _ FY23 FY24 183.6205.2 188.4196.2794.7654.8446.3351.0287.9 FY19-FY23 CAGR 28.9% Over the last five fiscal years, 90.1% of our revenue each fiscal year, on average, came from customers who purchased services from us during the prior fiscal year. June 30 Dec 31 6M FY23 6M FY24 (10.6)% Q2 YOYRevenue (£m) Q1 Q2 372.0 401.4 Revenue
Investor Relations Financials 20 Profitability FY19 FY20 FY21 FY22 FY23 _ FY23 FY24 10.6 20.3 17.338.6114.2102.454.423.429.1 F 1 June 30 Dec 31 6M FY23 6M FY24 F F 1 Profit before tax (£m) F F Q1 Q2 27.9 58.8 Margin 10.1% 6.7% 12.2% 15.6% 14.4% Q29.9% 5.8% 19.7% 9.2% Q1 6M14.7% 7.5% FY19 FY20 FY21 FY22 FY23 _ FY23 FY24 22.7 43.0 29.839.5164.2138.392.166.751.0 FY19-FY23 CAGR 34% F 1 June 30 Dec 31 6M FY23 6M FY24 F F 1 Adjusted profit before tax F F Q1 Q2 52.5 82.5 Margin 17.7% 19.0% 20.6% 21.1% 20.7% Q220.9% 12.4% 20.1% 15.8% Q1 6M20.5% 14.1% * See page 26 for reconciliation of IFRS to Non-IFRS metrics
Investor Relations Financials 21 Client relationships FY19 FY21 FY23 6M FY23 Q2FY24 34%31%34%32%33%34%35%38%38% F 1 June 30 Dec 31 Q2 FY23 Q2 FY24 FY20 F 21 Top 10 clients revenue % FY22 F 6M FY23 6M FY24 FY19 FY20 FY20 FY21 FY22 _ Q2FY23 Q2FY24 150156146134856563 F 1 June 30 Dec 31 Q2 FY23 Q2 FY24 F F 1 No. of clients / revenue > £1m* F 2 F 3 * Calculated on a 12 month rolling basis.
Investor Relations Financials 22 Number & spend of clients FY19 FY20 FY22 Q2FY23 698703711732615416275 June 30 Dec 31 Q2 FY23 Q2 FY24 FY20 FY21 FY22 FY23FY19 Total no. of clients FY19 FY21 FY23 6M FY23 Q2FY24 6,2506,45012,79012,85026,03022,15015,59013,38010,870 June 30 Dec 31 Q2 FY23 Q2 FY24 FY20 FY21 FY22 FY23FY19 Average spend (£000s) Top 10 clients 6M FY23 6M FY24 FY19 FY21 FY22 6M FY23 Q2FY24 270345483579905841697647699 June 30 Dec 31 Q2 FY23 Q2 FY24 FY20 FY21 FY22 FY23FY19 Average spend (£000s) Remaining clients 6M FY23 6M FY24
Investor Relations Financials 23 FY19 FY20 FY21 FY22 FY23 _ Q2FY23 Q2FY24 31%33%32%35% 31%29% 27% 26% 23%23%21%24%24%28% 34%39%39%41%42%44%45% UK Europe N. America RoW June 30 Dec 31 Q2 FY23 Q2 FY24 Revenue by Region Geography & Industry verticals 3% 3% 3% 6% 9% * Other includes consumer products, healthcare, and retail verticals 18% 11% 23% 8% 14% 26% Payments Banking & Capital Markets Insurance Technology, Media & Telecom. Mobility Other* Revenue by Vertical Q2 FY24 5%
Investor Relations Financials 24 CAPEX & Adjusted FCF FY19 FY20 FY21 FY22 FY23 _ FY23 FY24 1.4 4.2 0.83.413.513.75.27.36.1 F 1 June 30 Dec 31 6M FY23 6M FY24 F F 1 Capital expenditures (£m) F F Q1 Q2 2.2 7.6 % of Revenue 2.1% 2.1% 1.2% 2.1% 1.7% Q22.0% 0.8% 1.7% 0.4% Q1 6M1.9% 0.6% FY19 FY20 FY21 FY22 FY23 _ FY23 FY24 33.6 37.0 16.021.8111.5107.282.731.529.8 F 1 June 30 Dec 31 6M FY23 6M FY24 F F 1 Adjusted free cash flow (£m)* F F Q1 Q2 49.6 58.8 % of Revenue 10.4% 9.0% 18.5% 16.4% 14.0% Q218.0% 18.3% 11.1% 8.5% Q1 6M14.6% 13.3% * See page 26 for reconciliation of IFRS to Non-IFRS metrics
Appendix03
Investor Relations Appendix 26 IFRS to Non-IFRS reconciliation 2019 2020 2021 2022 2023 2022 2023 2022 2023 Reconciliation of Revenue Growth at Constant Currency to Revenue Growth as Reported under IFRS Revenue Growth as Reported under IFRS 32.3 % 21.9 % 27.2 % 46.7 % 21.4 % 31.6 % (7.3)% 30.2 % (10.6)% Foreign exchange rates impact (1.2)% (0.9)% 2.4 % 0.9 % (4.8)% (6.9)% 2.8 % (6.8)% 2.5 % Revenue Growth at Constant Currency Including Worldpay Captive 31.1 % 21.0 % 29.6 % 47.6 % 16.6 % 24.6 % (4.5)% 23.4 % (8.1)% Impact of Worldpay Captive — 3.2 % 0.8 % — — — — — — Proforma Revenue Growth Rate at Constant Currency Excluding Worldpay Captive 31.1 % 24.2 % 30.4 % 47.6 % 16.6 % 24.6 % (4.5)% 23.4 % (8.1)% Revenue 287,930 350,950 446,298 654,757 794,733 401,410 371,973 205,241 183,552 Reconciliation of Adjusted Profit Before Tax and Adjusted Profit for the Period £ in 000s Profit before Tax 30,100 23,364 54,368 102,379 114,163 58,839 27,918 20,271 10,605 Adjustments: Share based compensation expense 12,022 15,663 24,427 35,005 31,058 15,909 23,556 6,365 13,617 Discretionary EBT bonus — 27,874 — — — — — — — Amortization of acquired intangible assets 3,472 4,075 6,725 10,823 12,270 6,207 7,085 3,188 3,684 Foreign currency exchange (gains) / losses, net (2,945) (2,054) 6,546 (9,944) 10,729 7,533 2,685 14,947 4,764 Initial public offering expensses incurred 1,055 — — — — — — — — Secondary offering expenses incurred 1,009 — — — — — — — — Stamp duty on transfer of shares 10 — — — — — — — — Sarbanes-Oxley compliance readiness expenses incurred 1,440 — — — — — — — — Restructuring costs — — — — 6,588 1,113 — 1,113 — Fair value movement of contingent consideration 5,805 — — — (10,613) (7,143) (8,706) (2,894) (9,942) Net gain on disposal of subsidiary — (2,215) — — — — — — — Total Adjustments 21,868 43,343 37,698 35,884 50,032 23,619 24,620 22,719 12,123 Adjusted Profit Before Tax 51,968 66,707 92,066 138,263 164,195 82,458 52,538 42,990 22,728 Adjusted Profit Before Tax as a percentage of Revenue 18.0 % 19.0 % 20.6 % 21.1 % 20.7 % 20.5 % 14.1 % 20.9 % 12.4 % Profit for the Period 24,007 19,991 43,450 83,093 94,163 46,747 20,713 15,019 8,347 Adjustments: Adjustments to profit before tax 21,868 43,343 37,698 35,884 50,032 23,619 24,620 22,719 12,123 Tax impact of adjustments (3,969) (8,787) (7,241) (6,933) (11,829) (4,734) (4,916) (3,404) (2,977) Adjusted Profit for the Period 41,906 54,547 73,907 112,044 132,366 65,632 40,417 34,334 17,493 Reconciliation of Net Cash from Operating Activities to Adjusted Free Cash Flow Net Cash from Operating Activities 35,348 37,877 87,668 120,719 124,518 66,131 51,623 40,895 35,036 Adjustments: Grant received 1,784 888 228 139 494 220 230 220 23 Net purchase of non-current assets (tangible and intangible) (7,326) (7,319) (5,236) (13,695) (13,487) (7,575) (2,227) (4,151) (1,423) Adjusted Free Cash Flow 29,806 31,446 82,660 107,163 111,525 58,776 49,626 36,964 33,636 Adjusted Free Cash Flow as a percentage of Revenue 10.4 % 9.0 % 18.5 % 16.4 % 14.0 % 14.6 % 13.3 % 18.0 % 18.3 % TWELVE MONTHS ENDED JUNE 30 SIX MONTHS ENDED DECEMBER 31 THREE MONTHS ENDED DECEMBER 31
Endava to Acquire GalaxE Solutions to Boost its Position in North America Healthcare with Delivery from India London, UK; February 29, 2024 – Endava (NYSE: DAVA), a leading technology services company combining world-class engineering, industry expertise and a people-centric mindset, has entered into a definitive agreement to acquire 100% ownership of GalaxE Group, Inc. (“GalaxE”), a global IT and business solutions provider headquartered in New Jersey, United- States. Founded by Tim Bryan over 30 years ago, GalaxE has been singularly focused on driving digital transformation for Fortune 500 companies in the Healthcare, Financial Services and Retail industries. When completed, the transaction will add approximately 1,650 employees and provide several key strategic benefits to Endava: • Significantly expands Endava’s footprint in North America. GalaxE brings decades of experience serving customers in North America, significantly expanding Endava’s go- to-market and growth initiatives in the region. • Provides deep domain expertise in the U.S. Healthcare market. Over 70% of GalaxE’s revenues come from U.S. Healthcare clients, including clients in the payor services and pharmaceutical industries. • Establishes Endava’s delivery operations in India. With nearly 1,200 employees in India, GalaxE serves as the first building block underpinning the expansion of Endava’s delivery operations in India. • Complementary platform capabilities focused on enterprise digital transformation. GalaxE has developed a comprehensive suite of digital accelerators called GxFource, which offers broad applicability to Endava’s current clients while also enhancing its ability to win new opportunities. Total consideration for the acquisition is up to $405 million, primarily in cash with some stock, of which $30 million is conditional upon future performance of the GalaxE business. The transaction is expected to close in early April 2024 subject to the completion of customary closing conditions and approvals, including the expiration of the required waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976. “We are delighted for the GalaxE team to join Endava. This acquisition fits with our vision and strategy of providing our clients with a global delivery platform. As our first footprint in India, it gives us access to a deep and sophisticated talent pool and positions us well for meeting increasingly complex customer needs. Additionally, we believe that GalaxE’s deep expertise in Healthcare will help us scale to one of our most desirable and fast-growing industry verticals,” said John Cotterell, Endava’s CEO. “Additionally, I am very excited about the potential of the
GxFource accelerators to help our clients achieve digital transformation more effectively and efficiently.” Tim Bryan, founder and CEO of GalaxE commented “I'm very excited to expand our client focused digital transformation capabilities as a member of the Endava family. The acceleration of digital transformation, driven by dynamic technological changes in Data Management and AI, is expanding the opportunity in the market for firms like ours. Our employees will have exponentially more opportunities for professional growth and career development. The new combined team will have deep technical talent and an entrepreneurial approach which is a perfect fit for evolving client requirements. The breadth of the Endava platform significantly expands the potential impact of investments we have been making in our GxFource suite. Both organizations’ clients will benefit from the sophistication of our proprietary solutions delivered at a global scale. The team and our clients are incredibly excited about this combination and the future!” Advisors BofA Securities is serving as financial advisor to Endava and Akin Gump Strauss Hauer & Feld LLP is serving as legal advisor. JP Morgan Securities LLC is serving as financial advisor to GalaxE and White & Case LLP is serving as legal advisor. ABOUT ENDAVA: Technology is our how. And people are our why. By combining world-class engineering, industry expertise and a people-centric mindset, we consult and partner with our customers to create technological solutions that drive innovation and transform businesses. From ideation to production, we support our customers with tailor-made solutions across various industries and all around the world. Endava services clients in Payments, Banking and Capital Markets, Insurance, TMT, Consumer Products, Retail, Mobility and Healthcare. As of December 31, 2023, 11,539 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). https://www.endava.com/ 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 and GalaxE’s expectations with respect to the benefits of the merger; and Endava’s ability to capture opportunities in the healthcare industry and new and existing geographic markets. 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 ability to successfully integrate GalaxE’s business and personnel and to realize the benefits of the acquisition; Endava’s ability to manage its rapid growth or achieve anticipated growth; 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 maintain favourable pricing and utilization rates; 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 effectively manage its international operations, including Endava's exposure to foreign currency exchange rate fluctuations; 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; impact of general economic conditions on Endava’s business, results of operations and financial condition, including increased inflation; and other risks and uncertainties discussed in the “Risk Factors” section of Endava’s Annual Report on Form 20-F filed with the SEC on September 19, 2023 and other documents filed by Endava from time to time with the Securities and Exchange Commission. 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. Investor Relations Contact: Laurence Madsen, Endava investors@endava.com
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