Endava Reports Massive Net Loss Driven by £364.6M Goodwill Impairment; Revenue Declines, Guidance Lowered

summarizeSummary

Endava plc announced a significant net loss for Q3 FY26, driven by a massive goodwill impairment, alongside declining revenue and negative cash flow, leading to a lowered full-year outlook.

check_boxKey Events

• Massive Goodwill Impairment

  A non-cash goodwill impairment charge of £364.6 million was recognized, indicating a significant downward revision of future performance expectations and the value of prior acquisitions. This impairment is more than double the company's current market capitalization.

• Significant Net Loss

  The company reported a diluted loss per share of £(7.55) for Q3 FY26, a sharp decline from a profit of £0.18 in the prior year, primarily due to the goodwill impairment.

• Revenue Decline Continues

  Q3 FY26 revenue decreased by 8.4% year-over-year to £178.5 million (6.4% at constant currency), reflecting ongoing demand challenges and a continuation of negative trends from the previous quarter.

• Negative Cash Flow

  Net cash used in operating activities was £(0.4) million, and adjusted free cash flow was £(3.1) million for the quarter, a reversal from positive cash flow in the prior year.

auto_awesomeAnalysis

The company reported a substantial net loss for Q3 FY26, primarily due to a £364.6 million goodwill impairment charge, which reflects a significant downward revision of its future performance and the value of past acquisitions. This, combined with an 8.4% year-over-year revenue decline and negative operating cash flow, indicates severe operational challenges. The full-year guidance also projects continued revenue decline and significantly reduced adjusted EPS, signaling a challenging outlook. This news comes as the stock trades below its 52-week low, exacerbating investor concerns.