Endava Reports Massive Net Loss Driven by £364.6M Goodwill Impairment; Revenue Declines, Guidance Lowered
DAVA is trading near its 52-week low of $3.61 (9.4% below the low).
Summary
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.
Key Events · Earnings and Guidance · DAVA
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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.
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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.
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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.
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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.
Analysis · DAVA · Technology
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.
At the time of this filing, DAVA was trading at $3.27 on NYSE in the Technology sector, with a market capitalization of approximately $224.8M. The 52-week trading range was $3.61 to $17.36. This filing was assessed with negative market sentiment and an importance score of 9 out of 10.