Endava plc

Good day and welcome to NDAAVA's fourth quarter and 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. Laurence Madsen, Head of Investor Relations and ESG at Endava. Please go ahead.

Thank you. Good afternoon, everyone, and welcome to Endava's fourth quarter and fiscal year 2025 conference call. As a reminder, this conference call is being recorded. Joining me today are John Cotterow, Endava's Chief Executive Officer, and Mark Thurston, Endava's Chief Financial Officer. Before we begin, a quick reminder to our listeners. Our presentation and accompanying remarks today include forward-looking statements, including but not limited to statements regarding our guidance for Q1 fiscal year 2026 and for the full fiscal year 2026. The impact and headwinds facing our industry and business, our ability to capitalize on market opportunities and trends in our industry, including with respect to the development of AI, enhancements to our technology and offerings, our pipeline of client opportunities, and our ability to convert such opportunities into contracted orders. The benefits of our partnerships are pricing models, demand from clients for technology services, our ability to create long-term value for our clients, our people and our shareholders, and our business strategies, plans, operations, and growth opportunities. These statements are subject to risk 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 4, 2025, and in other filings that NDAVA makes from time to time with the FCC. 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 measures 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 fourth quarter and full fiscal year 2025 earnings call. For 25 years, Endava has delivered as an agile native and digital native solution provider. We're now undertaking a deep cultural and operational shift, becoming AI native. This transition is driven by our ongoing commitment to evolving our delivery model, forming new alliances, redesigning client engagements around domain expertise, adopting modern AI-oriented architectures, and institutionalizing rapid experimentation. Our scale, large enough to drive meaningful change yet compact enough to stay agile, allows us to execute the transformation without the inertia that hampers far bigger organizations. We're making good progress on our shift. towards becoming AI native and are seeing results, which I will highlight shortly. Client commitment to transformative technology is undiminished, which is reflected in our growing pipeline of opportunities. The conversion from the pipeline of opportunities to signed orders picked up in Q4, where we saw our highest ever order book value signed, leading to FY25 being our highest order book value signed on record. We believe this shows the strength of our customer relationships and the attractiveness of our transformative offerings. Despite the increase in the order book, the short-term operating backdrop remains volatile and many clients continue to recalibrate the timing of spending and therefore our outlook remains cautious. AI continues to be a strategic focus for many of our clients, and we have now passed the point where over half of our people use AI in projects. Endava is currently supporting multiple engagements aimed at evaluating, implementing, or scaling AI capabilities. The following are select examples from recent project activities. For a leading US healthcare services provider, we're scaling an AI-driven document processing platform that currently processes over 40 million medical records annually. The platform operates using a four-stage GenAI pipeline, comprising standardization, data extraction, parsing, and summarization, and integrates calibrated confidence scoring with a human-in-the-loop sampling mechanism to maintain measured precision and recall levels of 95%. This system is designed to minimize per document cost while preserving accuracy. The operational design targets automation that reduces risk exposure for healthcare payers and providers. Current performance benchmarks indicate a sustainable reduction in processing cost per document supporting long-term scalability and operational efficiency. With a Tier 1 global automotive supplier, we completed development of an in-cabin driver identification prototype. The machine learning models were trained using a combined dataset of synthetic and real-world video captures of in-cabin driver monitoring. Performance benchmarking was conducted across multiple models pick to match the target hardware, with results meeting current state of the art standards. Following prototype completion, the engagement has entered the customer validation phase. This includes integration into the vehicle's driver monitoring system, a prerequisite for the supplier's product deployment. In partnership with the research arm of a hyperscaler, we're exploring how creators can retain artistic control while working alongside generative AI. Our team built an image generation tool designed to improve visual fidelity compared to default models, underscoring the value of thoughtful human in the loop design. Deployment of the tool on the partner's infrastructure is now underway. The current roadmap includes expansion of the model's control surfaces and customization features to support a broader set of creative use cases. As I mentioned on our last earnings call, we are accelerating the pace of partnership expansion to enhance our solutions and further strengthen our value proposition. These partnerships are already contributing to deal flow and delivering opportunities. Our partnership with OpenAI continues to strengthen and resulted in a further expansion of internal technical capabilities. In June, Endava engineers and the team at OpenAI held a technical workshop focused on the Model Context Protocol, or MCP, Responses API, and Codex Toolchain. The session included direct sandbox experimentation, open roadmap discussions, and direct feedback loops. The event strengthened our progress towards AI-native delivery capability and informed a joint enablement roadmap. As part of our partnership, our joint go-to-market collaboration with OpenAI progressed on three fronts. First, we supplied comprehensive insurance sector pipeline data through the new shared tracking system to tighten deal tracking governance. Second, we developed cross-vertical playbooks that translate OpenAI's agent-based frameworks into standard offerings for US retail and supply chain clients. And third, we established a quarterly training cadence to keep Endava's delivery teams steadily building these capabilities. Importantly, our strategic partnership with OpenAI has resulted in client acquisitions. Between April and June of this year, the partnership supported multiple client engagements. Here are some examples. An Endava-sourced lead successfully converted a leading financial compliance technology provider into an enterprise customer for OpenAI Enterprise GPT. We are now orchestrating a company-wide rollout, beginning with legal, marketing, and customer support. The engagement includes the building of custom GPT extensions designed to integrate directly into department-level workflows. Initial performance benchmarks show an approximate 25% reduction in document review time. These results are being used to inform expansion plans across additional departments. Together with OpenAI, we've secured a new engagement for a leading global specialty insurer to implement a JETIC data to value ingestion for processing complex border O files The engagement also includes joint visioning sessions on an AI-enabled operating model for insurers. And following an introduction from OpenAI, we are undertaking a project for a leading global reinsurer that deploys autonomous AI agents to understand, classify and ingest incoming submission data. Learnings from this project are to be used to drive the design of a new AI native architecture for the client's business, replacing the legacy systems currently in place. We're engaged in enterprise scale AI initiatives with both AWS and Microsoft. We are co-creating solutions that integrate generative AI to transform operations and customer experiences across sectors. These engagements reflect alignment between Endava's delivery strength and our partners' cloud-native AI platforms. In collaboration with Google Cloud, Endava is contributing to the advancement of agentic AI. We are actively engaged in more than 30 agents-based projects across multiple geographies. These initiatives are focused on regulated sectors, including banking and other highly regulated industries. These projects are structured around the design and evaluation of production grade AI systems with emphasis on safety and measurable operational impacts. We've been named a premier partner in Adyen's newly launched global partnership program. This designation reflects Endava's track record of delivering integrated payment solutions in collaboration with Adyen across the commerce, financial services and digital native businesses. I'd now like to provide an update on our large strategic deals, defined as multi-year, large-scale engagements. The total value of our pipeline of potential large opportunities has grown. Additionally, we're increasing the number of large projects with flexible pricing structures tied to meeting deadlines, achieving required features or functions, or delivering at consistent high velocity. These new pricing models build on our longstanding ability to deliver quality at speed and are designed to support both our customers and ourselves. For example, in the payments vertical, Endava has begun engaging with some customers based on a transaction-based pricing model where clients are offered the ability to pay for our services on a fee per transaction basis. Indava signed an extension of its partnership with MasterCard to support real-time payments. The agreement reinforces Indava's role in supporting MasterCard's live market-critical services and reflects an expanded scope of collaboration. We also signed a five-year agreement with Reed Exhibitions, RX, a global event organizer and part of the RelX group. following a competitive tender process. Endava replaced the incumbent provider, and the scope of the agreement is focused on supporting RX's global technology operations over the medium to long term. RX cited Endava's focus on automation, issue prevention, and service model adaptability as key differentiators against other vendors. including traditional providers that primarily offer resource-based delivery from low-cost regions. RX highlighted Endava's use of agile-based support models, observability tools, and AI-enabled service desk functions as contributing factors in the selection process. The RX engagement reflects an enterprise shift from a transactional outsourcing model to a structured outcome-driven technology operation. Additionally, our collaboration with a leading financial institution in North America is gaining momentum. The client has now appointed us as a preferred supplier in the area of enterprise professional services, covering artificial intelligence and automation, application development and technology advisory. This expanded mandate further solidifies Indava's standing as a strategic vendor and trusted partner within the banking and financial industry. Moving to the important shifts resulting from the growth of Agentic AI. We are developing the next generation of software delivery lifecycle with a shift towards change delivery lifecycle, or CDLC for short. where intelligent software agents work side by side with our engineers. This is needed because truly leveraging agentic AI requires a delivery approach that pushes past traditional agile ceremonies, that embraces the autonomy of AI agents and their ability to learn and adapt. Instead of linear iteration, AI agents demand continuous oversight, guardrails, and adaptive governance to ensure safe, reliable outcomes. Our new approach replaces discrete project phases with one continuous stream of change. Every feature, fix, or enhancement flows from idea to production without pause. Internally, we created a program driving this change, serving as Endava's early adopter initiative that equips a growing cohort of engineers to apply agentic coding tooling, including OpenAI's Codex and Windsurf's Cascade. While the program is still in its initial deployment phase, it is already being used on real client work, and we are recording clear gains in speed, quality, and cost. We're seeing tasks that took days being completed in minutes, and regularly see up to 10 times productivity improvements We call this new delivery framework Endava Flow, a lean, pool-based operating model that is designed to propel the stream of change, remove friction, and release value the instant it is ready. Pilot engagements using this approach are already underway, with throughput, lead time, and quality metrics informing wider rollout. Collectively, these initiatives position agent technology at the core of Endava's long-term operating model transformation, driving higher productivity and faster change delivery. By pairing talent enablement with our CDLC-driven Endava flow, we are cultivating delivery environments where AI agents and human engineers work side by side, safely and at scale. This capability places Endava amongst the select group technology services firms able to operationalize AI across the entire software lifecycle. Moving now to our continued commitment to creating a positive impact for our people, clients, and the communities in which we operate, today we published our WeCare Sustainability Report for the fiscal year 2025. our fifth consecutive year of sustainability reporting. As announced in July, we had some leadership changes, including my assumption of additional operational responsibilities for the sales and go-to-market strategy, following the retirement of Julian Bull, our former Chief Operating Officer. Alistair Lukes, CBE, also joined us as Chief Engagement Officer, And he is responsible for chairing our new Global Advisory Board, whose members bring a wide experience across industries and regions, reflecting the breadth of the technology industry today. And finally, Rob Machin has returned as Chief People and Locations Officer, succeeding David Churchill. While strengthening our leadership team, we have also continued to adapt the size and shape of our workforce to align with market demands. As of quarter end, we were 11,479 endowments strong, representing a 5% decrease 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. In closing, I want to thank all endowments for your unwavering commitment and determination as we move through this era of digital change and uncover the opportunities it presents. We are committed to sustainable growth, to safeguarding the culture that makes us unique, and to delivering solutions that enable our clients to lead with confidence in a rapidly evolving world. And with that, I'll hand over to Mark for a closer look at our quarterly and annual financial results and guidance for the upcoming quarter and the new fiscal year. Thanks, John.