Endava (DAVA) Q1 Earnings And Revenues Surpass Estimates

Endava plc (NYSE:DAVA) reported first-quarter fiscal 2020 adjusted earnings per share (EPS) of 30 cents (£0.24), higher than the Zacks Consensus Estimate of 26 cents. The bottom line also improved 36.4% on a year-over-year basis.

Moreover, the company’s revenues of £82.4 million or $102 million were up 24% from the year-ago quarter. Moreover, the figure beat the Zacks Consensus Estimate of $101 million. Strong top-line growth was driven by an increase in existing customer base and addition of new ones during the quarter.

Quarter in Detail

Endava ended the quarter with 62 high-value clients who generated more than £1 million. reflecting 19% growth year over year. Moreover, clients who generated more than £2 million reached 42, surging 50% from the prior-year quarter.

Top 10 clients accounted for 41% of revenues during the quarter compared with 39% in the year-earlier quarter.

Notably, the company witnessed growth across all its geographical regions and verticals.

Geographically, 27% of revenues were generated in North America, 26% in Europe, 45% in the United Kingdom and 2% in the Rest of the World.

By industry vertical, Payments and Financial Services contributed to 53% of revenues while 25% came from TMT and 22% from Other.

Additionally, Endava continued to expand its client base, exiting the quarter with 278 active clients, up from 262 in the prior-year quarter.

Notably, the company announced that it will acquire Intuitus Limited, an independent provider of technology and digital due diligence plus other technology advisory services to private equity (PE) clients. This will help Endava expand the number of its PE firm clients.

Adjusted gross margin came in at 42.8%, up sequentially.

Balance Sheet and Cash Flow

Endava exited the quarter with cash and cash equivalents of £83.6 million compared with £70.2 million in the previous quarter.

Net cash from operating activities totaled £15.4 million compared with £2.1 million in the year-ago quarter.

Adjusted free cash flow was £13.5 million in the fiscal first quarter compared with £0.3 million in the prior year.

Outlook

For the second quarter of fiscal 2020, revenues are expected in the range of £82.5-£83.2 million, reflecting growth between 20% and 21%.

Adjusted EPS is anticipated in the range of £0.21-£0.22.

For the full fiscal, the company projects revenues in the £34-£343 million band, depicting 22-23% growth.

Adjusted EPS is estimated within £0.86-£0.89.

Zacks Rank and Stocks to Consider

Endava currently carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader technology sector are Alteryx, Inc. (NYSE:AYX) , Cirrus Logic, Inc. (NASDAQ:CRUS) and Fortinet, Inc. (NASDAQ:FTNT) , each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth rate for Alteryx, Cirrus Logic and Fortinet is currently pegged at 39.85%, 15% and 14%, respectively.

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