Endava plc

Good day and welcome to NDAAVA's third quarter of fiscal year 2025 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ms. Laurent Madsen, Head of Investor Relations and ESG at Endava. Please go ahead.

Thank you. Good afternoon, everyone, and welcome to Endeavor's third quarter of fiscal year 2025 conference call. As a reminder, this conference call is being recorded. Joining me today are John Cotterell, Endeavor's Chief Executive Officer, and Mark Thurston, Endeavor's Chief Financial Officer. Before we begin, a quick reminder to our listeners. Our presentation and our accompanying remarks today include forward-looking statements, including but not limited to statements regarding our guidance for Q4 fiscal year 2025 and for the full fiscal year 2025, the impacts of headwinds facing our industry and business, our ability to capitalize on market opportunities and trends in our industry, including with respect to developments with AI, addressable market, our expectations regarding the share repurchase program, announcements to our technology and offerings, demands from clients from our technology services, our ability to create long-term value for our clients, our people and our shareholders, and our business strategy, plans, operations, and growth opportunities. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements, and reported results should not be considered as an indication of future performance. Please note that these forward-looking statements made during this conference call speak only as of today's date, and we undertake no obligation to update them to reflect subsequent events or circumstances other than to the extent required by law. For more information, please refer to the risk factors section of our annual report filed with the Securities and Exchange Commission on September 19, 2024, and in other filings that NDATA makes from time to time with the FCC, including our current report on Form 6K filed with the FCC on March 28, 2025. Also, during the call, we'll present both IFRS and non-IFRS financial measures. While we believe the non-IFRS financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IFRS. Reconciliations of such non-IFRS measures to the most directly comparable IFRS measure are included in today's earnings press release as well as the investor presentation, both of which you can find on our investor relations site or on the SEC website. A link to the replay of this call will also be available on our website. With that, I'll turn the call over to John.

Thank you, Laurence, and welcome, everyone. We appreciate you joining us for our third quarter fiscal year 2025 earnings call. The business environment continues to evolve rapidly, and the quarter just ended has been challenging. We are witnessing what I would characterize as inconsistent behavior from some clients, with their business priorities shifting rapidly. By that, I mean that clients' desire to innovate remains strong, however, They're slow to sign large contracts in the current uncertain macroeconomic environment. Our slowing growth in the quarter was primarily driven by the weakening of the US dollar at the end of the quarter and some deals that did not get signed in North America and to a lesser extent in Asia Pacific. Mark will provide you with more details on our financial results shortly. Our pipeline of large opportunities continues to grow. However, with an increased level of global macroeconomic turbulence since our last earnings call, the pipeline is not converting into signed deals and thus into revenue at the rate we anticipated last quarter. In this uncertain environment, we are focusing on what we can control to best position the business for the long term. We continue to invest in the business, while at the same time closely managing our expenses to protect our margins. We are also increasing our share buyback authorization by an additional $50 million, which we believe is the optimum capital allocation tool for us in the current environment. We also plan to accelerate the pace of partnership formalization to enhance our solutions and further strengthen our value proposition. These partnerships are already contributing to deal flow and delivering opportunities. Just a few weeks ago, we announced our pioneering involvement in OpenAI's exclusive Beta Services Partner Program. Together, we have already developed industry-first products and solutions for multiple joint clients. We're extremely excited about this next step in our journey with OpenAI. Last week, we announced that we are an implementation partner for Google AgentSpace, a powerful platform that enables enterprises to embed intelligent, proactive agents across their workflows. At its core, AgentSpace offers a multimodal search agent that serves as a central conversational interface for accessing enterprise knowledge. With Alex Partners, a global consulting firm, we're excited to announce our strategic partnership, building on over 15 years of successful collaboration across some of the most complex and high-impact digital transformation programs globally. This partnership is designed to address the full spectrum of client needs, from strategic formulation and diagnostic assessment to technology, design, implementation, and scaling. Our joint approach ensures that clients benefit not only from the high-level strategic insight, but also from seamless execution that turns vision into tangible results, bridging the critical gap between strategic vision and technological realization. We've also partnered with SideFX, a leading developer of Houdini 3D procedural animation and visual effects software. The partnership combines our machine learning expertise and synthetic data with SideFX's renowned VFX software suite for simulation and procedural content creation. This process is particularly crucial for fields where precision and realism are key to innovation, like manufacturing line inspection and autonomous vehicle training. We've built a strong partnership with Backbase, a leader in engagement banking across both R&D and implementation streams. To date, we have jointly delivered digital banking solutions for seven banks, reinforcing Endava's role as a trusted and capable implementation partner. Our work has helped transform retail banking services by delivering comprehensive digital capabilities ranging from web and mobile retail and corporate banking applications to digital lending solutions. AI remains a priority for many of our clients, and we continue to help them navigate their AI journeys. Let me take you through a few recent examples. In our ongoing collaboration with a leading global pharmaceutical company, our engagement has focused on refining their processes relating to regulatory clinical trial submissions, where precision, reliability and speed are paramount. Facing the challenge of exceeding a rigorous accuracy benchmark measured against the output of a human clinical programmer, our team leveraged an advanced AI consensus mechanism enhanced by multi-shot training techniques designed to evaluate and capture an extensive amount of data. I'm pleased to report that across two pivotal data sets, we exceed the accuracy baseline by as much as 19%. At the same time, reducing the time taken from hundreds of workdays to just a few hours. We believe this achievement embodies our AI-driven approach and underscores our ability to deliver trusted, high-stakes outcomes in regulated environments. At one of the world's leading insurance groups, we've recently collaborated with two operations teams to illustrate the transformative impact AI can have on their daily operations. Through a series of targeted training sessions, we demonstrated how precision, prompt engineering can unlock new levels of productivity and innovation. The result was accelerated workflows, reduced operational friction, and a clear path forward for integrating AI at scale. The enthusiasm and commitment demonstrated by the teams underscore the tangible benefits of embracing AI, marking a critical step forward in their digital transformation journey. In our continued work with a Premier Golf performance brand, we are powering a strategic shift from B2B to B2C through AI-powered swing analysis and tailored coaching. We built a cutting-edge video analysis platform capable of breaking down swing mechanics with precision. Using synthetic data and privacy-first design, our models detect biomechanical movement with remarkable accuracy, and we're now advancing the analysis of intricate swing characteristics. For tailored coaching, we're developing an intelligent coaching agent one that combines historical data with real-time analysis to deliver personalized improvement plans. This agentic solution adapts to individual goals and harnesses insights from our video analysis. What was once reserved for elite athletes is now scalable for a wider audience. Through this engagement, our dedicated product team has also worked closely with the client to refine the product strategy and overall consumer experience from app functionality to market positioning. Our recent engagement with a top tier global services company showcased how generative AI can accelerate complex technical transformation. During a hackathon style session, participants blended structure with speed while working in two agile teams. One team tackled the upgrade of a 37-module Java application from Java 11 to 21, iterating AI-driven code improvements. The other team led a major migration over 1,000 entities into a modern data management framework using custom GPT workflows. Teams reported productivity gains of 50% to 300%. and a strong appetite to deepen AI integration, which is exactly the kind of transformation we aim to catalyze, hands-on, high-impact, and forward-looking. Now, I'd like to provide you with an update on our recent successes in adding to our opportunity pipeline of larger and longer-term deals. On recent earning calls, I've been highlighting the work we have been doing in securing these larger and longer-term deals. We consider these deals as being transformative for the relationships we build with our customers. Deals of this nature give us the ability to enter into true part discussions with our customers and elevate us beyond the technology domain into being relevant to the senior C-suite. I'm now going to take you through a few examples of deals that we're pursuing and have had recent successes with. In payments and banking, we've observed a key trend emerging around major global banks looking to modernize and reinvent their payments business and capabilities. We started working with a number of banks in Europe and the Middle East. Our heritage in this space enables us to be able to engage knowledgeably with these banks about modern technology platforms as a driver of their payments business strategy. We are being increasingly trusted to design, build, run, and evolve entire payment platform ecosystems. These deals are strategic and long-term in nature and require engagement with the senior leadership. They call on our industry expertise, our approach to core modernization, our delivery capabilities, and our ability to reimagine an AI-enabled future. In a number of our verticals, industry consolidation has led to overlapping ecosystems with multiple vendors, creating over-complexity, high maintenance cost, and delays in responding to market demands. We offer customers compelling insights to start addressing these challenges using our accelerators and tooling. We have recently engaged in discussions with a capital markets infrastructure company, a U.S. healthcare company, and a global financial services institution to help modernize their systems. And these deals are in our opportunity pipeline. We continue to support a leading fintech and payments provider in their strategic efforts to remediate technical debt and compete a major data center migration by fall 2025. Through our Ray and Infra accelerators, we are delivering an independent third-party perspective to help resiliency risks and unlock opportunities to enhance application monitoring across the products and services they deliver to their customers. Some additional projects worth highlighting are the following. Our partnership with a leading financial institution in North America continues on a major core modernization initiative focused on reverse engineering and remediating three core banking platforms using our maps and dash solutions. This engagement highlights our automation capabilities and enables our client to modernize their platforms, eliminate technical debt, and introduce new features and enhance performance. We are also expanding our presence in the U.S. healthcare sector with the addition of a new nationally recognized pharmacy benefit manager to our client roster. We launched a comprehensive benefit plan discovery phase using our Ray accelerator, craving the way for future initiatives to automate the creation and ongoing management of benefit plans. Now for an update on our people and innovation. Our recent Innovation Lab Global Final, held in Belgrade in March, brought together top Endava talent from around the world to showcase AI-driven solutions addressing real client challenges. Out of the many impressive entries, eight finalist teams competed, with Australia taking first place for an edge AI solution transforming healthcare. Germany secured second for bridging AI with diverse systems, and North Macedonia earned third for boosting digital accessibility through AI and open source tools. Argentina's team won the crowd's heart with an AI-powered payment automation solution. Congratulations to all participants. Your innovation continues to drive Endava forward. As of quarter end, we were 11,365 endowments strong, representing a 3.1% increase from the same period last year. We continue to prioritize recruitment in high demand areas, including data, AI, and cloud to match the evolving needs of our clients. To all endowments, thank you for your commitment and determination. As we navigate the digital shift and discover the new opportunities that it brings, we remain focused on building sustainable growth, preserving our strong culture, and delivering solutions that help our clients not just adapt, but lead. With that, I'll hand over to Mark for a closer look at our quarterly financial results and guidance for the upcoming quarter and remainder of the fiscal year.