# DAVA earnings call intelligence LOPJLB CallCard / temporal rollup · freemium · [stock page](https://www.lopjlb.com/stock/DAVA) · [Earnings tab](https://www.lopjlb.com/stock/DAVA?tab=earnings) Updated: 2026-09-05T06:15:39 Quarters analyzed: 8 ## Cross-quarter narrative Across eight earnings calls Endava’s story shifted from modest revenue growth and early AI‑driven wins in late‑2024 to a period of mounting macro volatility, elongated AI sales cycles and margin pressure through 2026. AI demand grew steadily, with AI‑related revenue rising to roughly 15% of total by Q3‑2026, yet longer client decision times and credit‑note shocks slowed top‑line performance, prompting multiple guidance cuts. Macro headwinds and FX weakness repeatedly eroded revenue and gross margins, while the payments vertical softened before a $100M win offered limited relief. The firm accelerated AI‑centric investments (Dava Flow, OpenAI, Google Gemini) and outcome‑based pricing, increasing operational leverage and exposing margin volatility. Workforce transition to AI roles drove higher attrition and reskilling costs. Despite these challenges, integration of GalaxE progressed and several strategic partnerships were delivered, providing a foundation for future growth, though many remain open‑ended. ## Latest CallCard · Q3 Endava missed Q3 revenue due to slower pipeline conversion, Middle East conflict, and macro headwinds; took GBP 364.6M goodwill impairment; AI-driven business grew to 15% of revenue; lowered Q4 guidance. **Guidance:** lowered — Lowered Q4 revenue guidance to GBP 181-185M (constant currency decrease 3.5% to 1.0% YoY) and full year revenue to GBP 721.8-725.8M (constant currency decrease 6.0% to 5.0% YoY) due to slower pipeline conversion, especially in banking and capital markets. **Tone:** mgmt 0.2 · Q&A pressure 0.7 · divergence 0.2 Management acknowledges near-term challenges but emphasizes strategic pivot to AI-driven business, partnerships, and long-term positioning. ### Demand visibility Limited visibility due to slower pipeline conversion and extended deal cycles. Management cites slower pipeline conversion, particularly in banking and capital markets, Middle East conflict delays, and longer execution of large outcome-based contracts as reducing near-term visibility. ### Margins / costs Margins compressed significantly due to go-to-market investments, bench expansion for AI training, and lower utilization during pivot. Adjusted PBT margin fell to 1.8% from 12.6% YoY. Costs increased from higher go-to-market investments and bench as staff trained in AI/Dava.Flow skills. Utilization lower due to retraining. Pricing stable on average workday measure. Shift to outcome-based contracts expected to protect margins long-term. ### Capital allocation Share repurchases funded by increased borrowings; leverage reduction a priority ahead of FY27 refinancing. Borrowings rose to GBP 195.8M to fund share repurchase program. Adjusted free cash flow negative GBP 3.1M due to March billing timing; expect improvement in Q4. Management intends to focus on reducing leverage as part of wider funding considerations. ### Milestones - **AI-driven business revenue share** [delivered]: AI-driven business grew from 5% to 15% of revenue in Q3 FY26 (GBP 27M). - **Dava.Flow client deployments** [on_track]: Dava.Flow deployed at 12 clients vs 3 last quarter. - **Mastercard collaboration** [new]: Announced collaboration with Mastercard combining AI-native engineering and payments expertise. - **NatWest Tyl partnership** [new]: Selected as strategic partner for NatWest's Tyl to modernize payments acceptance platform using Dava.Flow and PGX. - **PGX new wins** [delivered]: PGX gained two new wins: global payments provider and pan-European energy retailer. - **Slovenia Ministry of Finance renewal** [delivered]: Renewed partnership through 2028 for national tax portal. - **Google Cloud partnership expansion** [on_track]: Added new clients in financial services, retail, gaming; Longbrook Insurance AI underwriting platform; invited to Google AI Agent partner program; UK high street bank Gemini Enterprise project. - **OpenAI partnership** [on_track]: Continued strong relationship with OpenAI, collaborating on deploy code and early model access. ## Quarter one-liners - **2026 Q3:** Endava missed Q3 revenue due to slower pipeline conversion, Middle East conflict, and macro headwinds; took GBP 364.6M goodwill impairment; AI-driven business grew to 15% of revenue; lowered Q4 guidance. - **2026 Q2:** — - **2026 Q1:** Endava Q1 FY26 revenue missed guidance due to an unexpected client credit and weak non-large deal conversion; full-year guidance lowered to £735-752M; AI-native shift accelerates with Dava Flow, $100M payments win, and 70%+ services now AI-related. - **2025 Q4:** Endava posted a 3.9% revenue decline in Q4 FY25, highlighted a record order book and AI‑native transformation, but guided lower FY26 revenue amid margin pressure from AI investments and delayed deal start‑ups. - **2025 Q3:** Endava posted 11.7% revenue growth but flagged slower deal conversion, FX headwinds and macro turbulence, while highlighting AI partnerships, cost control and a conservative Q4 outlook. - **2025 Q2:** Endava Q2 FY25 revenue up 6.6% YoY; guidance lowered due to UK/RoW macro softness; AI-driven core modernization demand growing but with elongated cycles; $100M buyback announced; GalaxE integration progressing. - **2025 Q1:** — - **2024 Q4:** Endava reports modest revenue growth, AI‑driven demand and a diversifying client mix, but faces macro headwinds, elongated AI sales cycles and payments softness, keeping guidance modest. ## Theme arcs - **AI‑driven demand** (improving): AI revenue share grew from early pilots to 15% of revenue by Q3‑2026 - **Macro environment** (deteriorating): Persistent macro volatility and higher rates repeatedly pressured client spend - **Margin pressure** (deteriorating): AI investments, FX headwinds and outcome‑based pricing compressed adjusted gross margins - **Deal conversion** (deteriorating): Slower pipeline conversion and deferred large deals reduced near‑term revenue - **Payments vertical softness** (deteriorating): Payments revenue fell sharply in 2024 and remained a drag despite a later $100M win - **FX impact** (deteriorating): Currency weakness added £5‑6m revenue headwinds and margin compression - **Workforce transition attrition** (deteriorating): Shift to AI roles increased attrition and reskilling costs - **Outcome‑based pricing risk** (new): Increasing share of outcome contracts shifted risk to Endava, affecting margin stability ## Guidance path 2024 Q4:maintained → 2025 Q1:vague → 2025 Q2:lowered → 2025 Q3:maintained → 2025 Q4:lowered → 2026 Q1:lowered → 2026 Q2:vague → 2026 Q3:lowered --- Research context only. Not personalized investment advice. API: `GET /bff/api/bigfive/earnings-intel/DAVA`