Endava Announces First Quarter Fiscal Year 2022 Results

Rhea-AI Summary

Endava plc (NYSE: DAVA) reported strong Q1 FY2022 results, with revenue reaching £147.5 million, a 55% increase year-on-year, and 60.8% growth at constant currency. Diluted EPS rose to £0.36 from £0.12 in the previous year. Adjusted EPS was £0.49 compared to £0.26. Profit before tax was £24.9 million, up from £8.7 million. The company expects Q2 FY2022 revenues between £150 million and £152 million, and full-year revenues between £615 million and £620 million, reflecting solid demand across regions. Cash and equivalents totaled £82 million, an increase from £69.9 million.

Positive

• 55% year-on-year revenue growth to £147.5 million for Q1 FY2022.
• Diluted EPS increased to £0.36 from £0.12 in the prior year.
• Adjusted diluted EPS rose to £0.49 from £0.26 year-on-year.
• Profit before tax increased to £24.9 million from £8.7 million in the prior year.
• Strong outlook with expected Q2 revenues between £150 million and £152 million.

Negative

• Net cash from operating activities declined to £19.9 million from £21.5 million year-on-year.
• Adjusted free cash flow decreased to £16.5 million from £21.2 million in the prior year.

Q1 FY2022

55.0% Year on Year Revenue Growth to £147.5 million

60.8% Revenue Growth at Constant Currency

IFRS diluted EPS £0.36 compared to £0.12 in the prior year comparative period

Adjusted diluted EPS £0.49 compared to £0.26 in the prior year comparative period

LONDON--(BUSINESS WIRE)-- 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 September 30, 2021, the first quarter of its 2022 fiscal year ("Q1 FY2022").

"Endava delivered excellent results for Q1 FY2022, with revenue of £147.5 million, an increase of 55.0% Year on Year and 60.8% in constant currency. We continue to grow the number of clients paying us over £1 million on a rolling 12 months basis, and demand for digital services remains strong in all regions and verticals," said John Cotterell, Endava's CEO.

FIRST QUARTER FISCAL YEAR 2022 FINANCIAL HIGHLIGHTS:

• Revenue for Q1 FY2022 was £147.5 million, an increase of 55.0% compared to £95.1 million in the same period in the prior year.
• Revenue growth rate at constant currency (a non-IFRS measure) was 60.8% for Q1 FY2022, compared to 16.9% in the same period in the prior year.
• Profit before tax for Q1 FY2022 was £24.9 million, compared to £8.7 million in the same period in the prior year.
• Adjusted profit before tax (a non-IFRS measure) for Q1 FY2022 was £34.8 million, compared to £18.2 million in the same period in the prior year, or 23.6% of revenue, compared to 19.2% of revenue in the same period in the prior year.
• Profit for the period was £20.5 million in Q1 FY2022, resulting in a diluted EPS of £0.36, compared to profit of £6.7 million and diluted EPS of £0.12 in the same period in the prior year.
• Adjusted profit for the period (a non-IFRS measure) was £28.3 million in Q1 FY2022, resulting in adjusted diluted EPS (a non-IFRS measure) of £0.49, compared to adjusted profit for the period of £14.7 million and adjusted diluted EPS of £0.26 in the same period in the prior year.

CASH FLOW:

• Net cash from operating activities was £19.9 million in Q1 FY2022, compared to £21.5 million in the same period in the prior year.
• Adjusted free cash flow (a non-IFRS measure) was £16.5 million in Q1 FY2022, compared to £21.2 million in the same period in the prior year.
• At September 30, 2021, Endava had cash and cash equivalents of £82.0 million, compared to £69.9 million at June 30, 2021.

OTHER METRICS FOR THE QUARTER ENDED SEPTEMBER 30, 2021:

• Headcount reached 9,616 at September 30, 2021, with 8,483 average operational employees in Q1 FY2022, compared to a headcount of 7,199 at September 30, 2020 and 6,204 average operational employees in the same quarter of the prior year.
• Number of clients with over £1 million in revenue on a rolling twelve months basis was 93 at September 30, 2021, compared to 66 at September 30, 2020.
• Top 10 clients accounted for 36% of revenue in Q1 FY2022, compared to 39% in the same period in the prior year.
• By geographic region, 36% of revenue was generated in North America, 20% was generated in Europe, 41% was generated in the United Kingdom and 3% was generated in the rest of the world in Q1 FY2022. This compares to 29% in North America, 25% in Europe, 43% in the United Kingdom and 3% in the rest of the world in the same period in the prior year.
• By industry vertical, 50% of revenue was generated from Payments and Financial Services, 25% from TMT and 25% from Other in Q1 FY2022. This compares to 50% from Payments and Financial Services, 28% from TMT and 22% from Other in the same period in the prior year.

OUTLOOK:

Second Quarter Fiscal Year 2022:

Endava expects revenues will be in the range £150.0 million to £152.0 million, representing constant currency revenue growth of between 47.0% and 49.0%. Endava expects adjusted diluted EPS to be in the range of £0.42 to £0.44 per share.

Full Fiscal Year 2022:

Endava expects revenues will be in the range of £615.0 million to £620.0 million, representing constant currency growth of between 40.0% and 41.0%. Endava expects adjusted diluted EPS to be in the range of £1.71 to £1.76 per share.

This above guidance for Q2 Fiscal Year 2022 and the Full Fiscal Year 2022 assumes the exchange rates at the end of October (when the exchange rate was 1 British Pound to 1.37 US Dollar and 1.18 Euro).

Endava is not able, at this time, to provide an outlook for IFRS diluted EPS for Q2 FY2022 or FY2022 because of the unreasonable effort of estimating on a forward-looking basis 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. Endava is also not able, at this time, to reconcile to an outlook for revenue growth not at constant currency because of the unreasonable effort of estimating foreign currency exchange (gains)/losses, the effect of which may be significant, on a forward-looking basis.

The guidance provided above is forward-looking in nature. Actual results may differ materially. See the cautionary note regarding “Forward-Looking Statements” below.

CONFERENCE CALL DETAILS:

The Company will host a conference call at 8:00 am EST today, November 16, 2021, to review its Q1 FY2022 results. To participate in Endava’s Q1 FY2022 earnings conference call, please dial in at least five minutes prior to the scheduled start time (833) 921-1651 or (778) 560-2811 for international participants, Conference ID 3993499.

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, December 3, 2021.

ABOUT ENDAVA PLC:

Endava is reimagining the relationship between people and technology. By leveraging next-generation technologies, our agile, multi-disciplinary teams provide a combination of product & technology strategies, intelligent experiences, and world class engineering to help clients become digital, experience-driven businesses by assisting them in their journey from idea generation to development and deployment of products, platforms and solutions. Endava collaborates with its clients, seamlessly integrating with their teams, catalysing ideation and delivering robust solutions.

Endava services clients in Payments and Financial Services, TMT, Consumer Products, Retail, Mobility and Healthcare. As of September 30, 2021 9,616 Endavans served clients from locations in Australia, North America, Singapore and Western Europe and delivery centres in Bosnia & Herzegovina, Bulgaria, Croatia, Moldova, North Macedonia, Romania, Serbia, Slovenia, Argentina, Colombia, Mexico, Uruguay and Venezuela.

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, revenue growth at constant currency adjusted for the sale of Endava Technology SRL, also referred to as “the Worldpay Captive” to Worldpay on August 31, 2019, 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 September 30, 2020 were used to convert revenue for the fiscal quarter ended September 30, 2021 and the revenue for the comparable prior period.

Revenue growth at constant currency adjusted for the sale of the Worldpay Captive is revenue growth at constant currency adjusted to exclude the impact of the sale of the Worldpay Captive.

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 and, realised and unrealised foreign currency exchange (gains)/losses, all of which are non-cash items. Adjusted PBT margin is Adjusted PBT as a percentage of total revenue.

Adjusted profit for the period is defined as Adjusted PBT together with the tax impact of these adjustments.

Adjusted diluted EPS is defined as Adjusted profit for the period, divided by weighted average number of shares outstanding - diluted.

Adjusted free cash flow is the Company’s net cash from operating activities, plus grants received, less net purchases of non-current assets (tangible and intangible).

Management believes these measures help illustrate underlying trends in the Company's business and uses the measures to establish budgets and operational goals, communicated internally and externally, for managing the Company's business and evaluating its performance. Management also believes the presentation of its non-IFRS financial measures enhances an investor’s overall understanding of the Company’s historical financial performance. The presentation of the Company’s non-IFRS financial measures is not meant to be considered in isolation or as a substitute for the Company’s financial results prepared in accordance with IFRS, and its non-IFRS measures may be different from non-IFRS measures used by other companies. Investors should review the reconciliation of the Company’s non-IFRS financial measures to the comparable IFRS financial measures included below, and not rely on any single financial measure to evaluate the Company’s business.

This press release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by the use of terms and phrases such as “believe,” “expect,” "outlook," “may,” “will”, and other similar terms and phrases. Such forward-looking statements include, but are not limited to, the statements regarding Endava’s projected financial performance for the second fiscal quarter of fiscal year 2022 and the full fiscal year 2022. 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 COVID-19 pandemic and the precautions taken in response to the pandemic or if general economic conditions in Europe, the United States or the global economy worsen; 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 penetrate new industry verticals and geographies and grow its revenue in current industry verticals and geographies; Endava’s ability to maintain favourable pricing and utilisation 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 remediate the identified material weaknesses and 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 our Annual Report on Form 20-F filed with the Securities and Exchange Commission (“SEC”) on September 28, 2021. 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.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

	Three Months Ended September 30
	2021			2020(1)
	£’000			£’000
REVENUE	147,465			95,125
Cost of sales
Direct cost of sales	(89,486		)	(57,476		)
Allocated cost of sales	(5,290		)	(4,732		)
Total cost of sales	(94,776		)	(62,208		)
GROSS PROFIT	52,689			32,917
Selling, general and administrative expenses	(27,643		)	(20,427		)
Net impairment losses on financial assets	(1,161		)	(840		)
OPERATING PROFIT	23,885			11,650
Net Finance income / (expense)	1,037			(2,925		)
PROFIT BEFORE TAX	24,922			8,725
Tax on profit on ordinary activities	(4,377		)	(2,017		)
PROFIT FOR THE PERIOD	20,545			6,708
OTHER COMPREHENSIVE INCOME
Items that may be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations	2,049			(847		)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD ATTRIBUTABLE TO OWNERS OF THE PARENT	22,594			5,861
EARNINGS PER SHARE (EPS):
Weighted average number of shares outstanding - Basic	55,649,000			54,494,227
Weighted average number of shares outstanding - Diluted	57,792,616			56,639,638
Basic EPS (£)	0.37			0.12
Diluted EPS (£)	0.36			0.12

(1) The presentation of the income statement has been changed to separately disclose the net impairment losses on financial assets on the face of the Consolidated Statement of Comprehensive Income (refer to Note 3C of our Annual Report on Form 20-F for the fiscal year ended June 30, 2021 for details).

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2021		June 30, 2021		September 30, 2020
	£’000		£’000		£’000
ASSETS - NON-CURRENT
Goodwill	126,440		124,417		104,780
Intangible assets	67,895		69,550		36,953
Property, plant and equipment	15,484		13,324		12,157
Lease right-of-use assets	55,130		57,193		49,020
Deferred tax assets	23,929		18,674		15,797
Financial assets	225		363		772
TOTAL	289,103		283,521		219,479
ASSETS - CURRENT
Trade and other receivables	141,511		118,303		92,743
Corporation tax receivable	864		938		2,613
Financial assets	565		563		584
Cash and cash equivalents	82,034		69,884		70,039
TOTAL	224,974		189,688		165,979
TOTAL ASSETS	514,077		473,209		385,458
LIABILITIES - CURRENT
Lease liabilities	13,007		13,543		11,102
Trade and other payables	85,972		78,634		66,078
Corporation tax payable	7,526		4,294		2,885
Contingent consideration	5,904		5,718		1,392
Deferred consideration	5,045		624		3,783
TOTAL	117,454		102,813		85,240
LIABILITIES - NON CURRENT
Lease liabilities	47,548		50,142		40,563
Deferred tax liabilities	9,553		10,010		5,691
Deferred consideration	4,633		9,370		5,079
Other liabilities	209		205		133
TOTAL	61,943		69,727		51,466
EQUITY
Share capital	1,114		1,114		1,099
Share premium	247		247		229
Merger relief reserve	30,003		30,003		25,527
Retained earnings	315,021		283,059		227,398
Other reserves	(11,550	)	(13,599	)	(4,664	)
Investment in own shares	(155	)	(155	)	(837	)
TOTAL	334,680		300,669		248,752
TOTAL LIABILITIES AND EQUITY	514,077		473,209		385,458

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended September 30
	2021		2020
	£’000		£’000
OPERATING ACTIVITIES
Profit for the period	20,545		6,708
Income tax charge	4,377		2,017
Non-cash adjustments	14,742		12,417
Tax (paid) / received	(2,233	)	152
Net changes in working capital	(17,522	)	176
Net cash from operating activities	19,909		21,470
INVESTING ACTIVITIES
Purchase of non-current assets (tangibles and intangibles)	(3,562	)	(641	)
Proceeds from disposal of non-current assets	112		65
Acquisition of subsidiaries, consideration in cash	(611	)	(50,790	)
Cash and cash equivalents acquired with subsidiaries	—		1,603
Interest received	9		27
Net cash used in investing activities	(4,052	)	(49,736	)
FINANCING ACTIVITIES
Proceeds from sublease	135		157
Repayment of lease liabilities	(3,801	)	(2,954	)
Interest paid	(249	)	(211	)
Grant received	1		309
Issue of shares	—		8
Net cash from financing activities	(3,914	)	(2,691	)
Net change in cash and cash equivalents	11,943		(30,957	)
Cash and cash equivalents at the beginning of the period	69,884		101,327
Exchange differences on cash and cash equivalents	207		(331	)
Cash and cash equivalents at the end of the period	82,034		70,039

RECONCILIATION OF IFRS FINANCIAL MEASURES TO NON-IFRS FINANCIAL MEASURES

RECONCILIATION OF REVENUE GROWTH RATE AS REPORTED UNDER IFRS TO REVENUE GROWTH RATE AT CONSTANT CURRENCY:
	Three Months ended September 30
	2021		2020
REVENUE GROWTH RATE AS REPORTED UNDER IFRS	55.0	%	15.5	%
Foreign exchange rates impact	5.8	%	1.4	%
REVENUE GROWTH RATE AT CONSTANT CURRENCY INCLUDING WORLDPAY CAPTIVE	60.8	%	16.9	%
Impact of Worldpay Captive	—		3.2	%
PRO-FORMA REVENUE GROWTH RATE AT CONSTANT CURRENCY ADJUSTED FOR THE SALE OF THE WORLDPAY CAPTIVE	60.8	%	20.1	%

RECONCILIATION OF ADJUSTED PROFIT BEFORE TAX AND ADJUSTED PROFIT FOR THE PERIOD:

	Three Months Ended September 30
	2021		2020
	£’000		£’000
PROFIT BEFORE TAX	24,922		8,725
Adjustments:
Share-based compensation expense	9,158		5,931
Amortisation of acquired intangible assets	2,461		1,166
Foreign currency exchange (gains) / losses, net	(1,757	)	2,412
Total adjustments	9,862		9,509
ADJUSTED PROFIT BEFORE TAX	34,784		18,234
PROFIT FOR THE PERIOD	20,545		6,708
Adjustments:
Adjustments to profit before tax	9,862		9,509
Tax impact of adjustments	(2,107	)	(1,550	)
ADJUSTED PROFIT FOR THE PERIOD	28,300		14,667
Diluted EPS (£)	0.36		0.12
Adjusted diluted EPS (£)	0.49		0.26

RECONCILIATION OF NET CASH FROM OPERATING ACTIVITIES TO ADJUSTED FREE CASH FLOW

	Three Months Ended September 30
	2021		2020
	£’000		£’000
Net cash from operating activities	19,909		21,470
Adjustments:
Grant received	1		309
Purchases of non-current assets (tangibles and intangibles)	(3,450	)	(576	)
Adjusted Free cash flow	16,460		21,203

SUPPLEMENTARY INFORMATION

SHARE-BASED COMPENSATION EXPENSE
	Three Months Ended September 30
	2021	2020
	£’000	£’000
Direct cost of sales	5,346	3,498
Selling, general and administrative expenses	3,812	2,433
Total	9,158	5,931

DEPRECIATION AND AMORTISATION
	Three Months Ended September 30
	2021	2020
	£’000	£’000
Direct cost of sales	3,916	3,570
Selling, general and administrative expenses	3,057	1,773
Total	6,973	5,343

EMPLOYEES, TOP 10 CUSTOMERS AND REVENUE SPLIT

	Three Months Ended September 30
	2021		2020
Closing number of total employees (including directors)	9,616		7,199
Average operational employees	8,483		6,204
Top 10 customers %	36	%	39	%
Number of clients with > £1m of revenue (rolling 12 months)	93		66
Geographic split of revenue %
North America	36	%	29	%
Europe	20	%	25	%
UK	41	%	43	%
Rest of World (RoW)	3	%	3	%
Industry vertical split of revenue %
Payments and Financial Services	50	%	50	%
TMT	25	%	28	%
Other	25	%	22	%

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211116005776/en/

INVESTORS:

Endava Plc

Laurence Madsen, Investor Relations Manager

Investors@endava.com

Source: Endava plc

FAQ

What were Endava's Q1 FY2022 revenue figures?

Endava reported Q1 FY2022 revenues of £147.5 million, marking a 55% increase year-on-year.

What is the forecast for Endava's revenue in Q2 FY2022?

Endava expects revenues in Q2 FY2022 to be between £150 million and £152 million.

What was Endava's diluted EPS for Q1 FY2022?

Endava's diluted EPS for Q1 FY2022 was £0.36, up from £0.12 in the same period last year.

What guidance did Endava provide for full fiscal year 2022?

Endava expects full fiscal year 2022 revenues to be between £615 million and £620 million.

How much cash and cash equivalents did Endava report?

Endava reported cash and cash equivalents of £82 million as of September 30, 2021.