Endava announces near 98.9 million Euro revenues for Q2 of fiscal year 2020 (needed Dec. 2019)

Endava, global provider of digital transformation, agile development and intelligent automation services, announced the results for Q2 of its 2020 fiscal year.

“Endava delivered another strong quarter with revenue for Q2 FY2020 of 85.9 million pounds, an increase of 19.6 per cent year on year on a reported basis or 20.5 per cent on a constant currency basis from 71.8 million pounds in the same period in the prior year. Our proforma constant currency growth rate reflecting the sale of the Worldpay Captive was 24.5 per cent year on Year. In addition to strong continued organic growth, our recent acquisitions of Intuitus and Exozet should further our expansion efforts,” said John Cotterell, Endava’s CEO.

SECOND QUARTER FISCAL YEAR 2020 FINANCIAL HIGHLIGHTS:

• Revenue for Q2 FY2020 was £85.9 million, an increase of 19.6% compared to £71.8 million in the same period in the prior year.
• Revenue growth rate at constant currency (a non-IFRS measure) was 20.5% for Q2 FY2020 compared to 42.4% in the same period in the prior year.
• Loss before tax for Q2 FY2020 was (17.3) million pounds compared to profit before tax of 9.4 million pounds in the same period in the prior year. The loss during the quarter is the result of the declaration of a non-recurring, discretionary employee bonus of 27.7 million pounds in December 2019. The Endava Limited Guernsey Employee Benefit Trust (“EBT”) funded the first tranche of the bonus through sales of Endava’s Class A ordinary shares in November 2019. The funding of the second tranche by the EBT is expected to occur during the second half of FY2020. As previously disclosed, the EBT, whose beneficiaries are our employees, was holding certain Class A ordinary shares for sale in the event it decided to fund a discretionary cash bonus to our employees.
• Adjusted profit before tax (a non-IFRS measure) for Q2 FY2020 was 20.5 million pounds compared to 13.6 million pounds in the same period in the prior year, or 23.8% of revenue compared to 18.9% in the same period in the prior year.
• Loss for the period was (13.8) million pounds in Q2 FY2020, resulting in a diluted EPS of (0.25) pounds, compared to profit for the period of 7.4 million pounds and diluted EPS of 0.14 pounds in the same period in the prior year.
• Adjusted profit for the period (a non-IFRS measure) was 16.8 million pounds in Q2 FY2020, resulting in adjusted diluted EPS (a non-IFRS measure) of 0.30 pounds compared to adjusted profit for the period of 10.9 million pounds and adjusted diluted EPS of £0.20 in the same period in the prior year.

CASH FLOW:

• Net cash from operating activities was 11.1 million pounds in Q2 FY2020 compared to 9.6 million pounds in the same period in the prior year.
• Adjusted free cash flow (a non-IFRS measure) was 8.0 million pounds in Q2 FY2020 compared to 9.2 million pounds in the same period in the prior year.
• At December 31, 2019, Endava had cash and cash equivalents of 79.0 million pounds, compared to 70.2 million pounds at June 30, 2019.

According to a company release, other metrics include:

• Headcount reached 6,267 at December 31, 2019, with 5,472 average operational employees in Q2 FY2020, compared to a headcount of 5,389 at December 31, 2018 and 4,845 average operational employees in the same quarter of the prior year.
• Number of clients with over £1 million in revenue was 65 on a rolling twelve months basis at December 31, 2019 compared to 60 at December 31, 2018.
• Top 10 clients accounted for 37% of revenue in Q2 FY2020, compared to 38% in the same period in the prior year.
• By geographic region, 29% of revenue was generated in North America, 23% was generated in Europe, 45% was generated in the United Kingdom and 3% was generated in the Rest of the World in Q2 FY2020. This compares to 27% in North America, 28% in Europe and 45% in the United Kingdom in the same period in the prior year.
• By industry vertical, 53% of revenue was generated from Payments and Financial Services, 24% from TMT and 23% from Other. This compares to 53% Payments and Financial Services, 27% TMT and 20% Other in the same period in the prior year.

On December 17, 2019 Endava announced the purchase of Exozet GmbH (“Exozet”), headquartered in Berlin, Germany. Exozet is a leading German digital agency delivering digital transformation from ideation to production using Agile development.

On November 4, 2019, Endava announced the purchase of Intuitus Limited (“Intuitus”), headquartered in Edinburgh, Scotland. Intuitus is a leading independent provider of information technology due diligence and other technology advisory services to Private Equity clients.

For the Q3 of fiscal year 2020, the company expects revenues will be in the range £87.5m to £88.0m, representing constant currency growth of between 26% and 27%. We expect adjusted diluted EPS to be in the range of £0.21 to £0.22 per share. For the full fiscal year, the company expects revenues will be in the range £349m to £353m, representing constant currency growth of between 25% and 26%. We expect adjusted diluted EPS to be in the range of £0.95 to £0.99 per share.

Our guidance regarding constant currency growth is pro-forma for the sale of Endava Technology SRL, also referred to as “the Worldpay Captive,” to Worldpay. The transaction closed on August 31, 2019. This quarter, we are providing guidance for Q3 FY2020 and for the Full Fiscal Year 2020 using the exchange rates at the end of January, when the exchange rate was 1 GBP to 1.31 USD and 1.19 Euro.

Endava is not able, at this time, to provide an outlook for IFRS diluted EPS for Q3 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.