Endava plc

Good day and welcome to the NDAAVA's first quarter fiscal year 2026 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on a touch-tone phone. 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 NDAVA's first quarter of our fiscal year 2026 conference call. As a reminder, this conference call is being recorded. Joining me today are John Cotterell, NDAVA's Chief Executive Officer, and Mark Thurston, NDAVA'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 Q2 fiscal year 2026 and for the full fiscal year 2026, the impacts of headwinds facing our industry and business, trends in our industry, including with respect to developments with AI, enhancements to our technology and offerings, our pipeline of client opportunity, and our ability to convert such opportunities into contracted orders. the benefits of our partnerships, our pricing models, demand from clients for our 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 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 Security and Exchange Commission on September 4, 2025, and in other filings that NDAVA makes from time to time with the SEC. 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. Reconciliation 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 first quarter fiscal year 2026 earnings call. Endava continues to be deeply engaged by and with major companies across the world as they look for support in navigating the journey towards AI whilst ensuring operational resilience in existing platforms and devices. We believe the partnerships with major technology giants And the decisions we took three years ago, which led to the development of our AI-native change delivery lifecycle, now branded DAVA Flow, see us well-placed for the coming years. However, we continue to navigate the challenges associated with this transition in business models, delivery approach, and acceleration of the new AI-driven digital wave. The first quarter results were lower than guided, primarily due to an unexpected credit made to a client that arose subsequent to our last earnings call, as well as certain non-large strategic pipeline opportunities that did not convert into revenue during the quarter as anticipated. While these factors weighed on our performance, our ability to secure a multi-year strategic relationship with a leading payments company of up to $100 million demonstrates the strength of our client relationships. This partnership will utilize the best of Endava's global delivery capability. as well as our AI and advanced engineering capabilities to streamline our clients' technology platforms and enhance existing capabilities. This represents a prime example of the type of deal and partnership we are targeting, utilizing our capability as an AI-native, technology-agnostic transformation partner. Our broader partner ecosystem is already generating incremental potential pipeline opportunities and client interest in dava flow is accelerating. I will return to each of these topics later in the call. Following the sales leadership realignment announced last quarter, we recently hired a chief growth officer for commercial services for Europe and North America. These changes are already sharpening our customer engagement model, which is evident in the composition of our potential opportunity pipeline, which we are tracking closely. We remain committed to discipline cost management to protect margins while continuing to focus on growth. Starting with an update on our AI-related engagements, AI now anchors many clients' technology roadmaps, and we are partnering across a spectrum of projects, from early proof of concept to enterprise-wide rollouts and subsequent optimization efforts. Following the engagement for a leading U.S. healthcare services provider, where we deployed AI to automate the intake and summarization of medical bills and supporting documentation, We have now advanced integration into the client's adjuster portal and enabled both near real time and scheduled processing to support peak volumes. The architecture is built for compliance and auditability with US data residency and targets high accuracy to meet over 95% precision while holding unit costs below half a cent per page. early performance indicates faster, more consistent decisions and a clear path to materially lower per-claim handling costs. Building on the enterprise ChatGPT program, our collaboration with a leading financial compliance technology provider has progressed. We partnered with OpenAI to drive a company-wide deployment of ChatGPT Enterprise, anchored in governance and enablement. Within three months, more than 500 licenses were rolled out with a single sign-on role-based access and audit logging. Key team members across finance, legal, IT, client services, and support received train-the-trainer enablement to develop high-value use cases and custom GPTs reinforced by structured communications. weekly show-and-tell sessions, and continuous measurements. Adoption has scaled with growing catalogs of validated use cases, and measurable productivity gains are emerging in document workflows and client service operations. These first two client cases are examples we have previously discussed on earnings calls, and I'm covering them to show how these engagements are progressing. to show how engagements are building and deepening once production solutions are in place. For a leading US retail pharmacy chain, we are modernizing a core handheld application by upgrading its code base using AI-assisted analysis, leveraging GitHub Copilot. We completed a comprehensive assessment and prepared a two-phase execution plan that targets the highest impact fixes and de-risks the upgrade. The resulting playbook is designed to be repeatable across other applications, strengthens security, reduces technical debt, and supports a faster release cadence. Initial results indicate AI-enabled reviews and automated testing are lowering manual effort by between 25% and 30%. and shortening migration time by between 20% and 25%, implying a projected productivity uplift between 30% and 35% once both phases are completed. For a global energy and utilities provider that runs large-scale power grid simulations, we migrated a 400,000-line Fortran system. We built AI-assisted parsers and automation tools with agent coding tools to preserve program flow while refactoring syntax and improving memory management. We also identified code sections tied to domain concepts to speed future feature delivery. This approach reduced manual edit risk and enabled automated conversion at scale. initial benchmarks indicate up to close to 30 times faster code changes with improved reliability for an e-learning provider serving over 12 000 healthcare and human services organizations we developed an ai enabled content studio that streamlines the entire content lifecycle drafting review quality assurance export and accreditation for a catalog of 7,000 plus courses. Built on Windsurf and integrated with the client's enterprise AI infrastructure, the platform generates course outlines and transcripts, runs policy-based QA agents, automates SCORM imports, and compares accreditation standards. Automation rules and validation tests further enhance compliance and operational consistency. Results show end-to-end authoring efforts have fallen by approximately 30%, and modeling shows projected time savings of 30% to 50% when scaling updates across the full course library. Turning to partnerships, our investment in our partnership with OpenAI is expanding as we've enrolled a group of Endava engineers in OpenAI's newly launched PAN-exclusive certification program. Our team is pursuing multiple opportunities across the OpenAI product suite through training created by OpenAI that is only available to service partners. This is another step to deepen our knowledge and advance our AI-native delivery capability. On the commercial side, the joint go-to-market framework we created in partnership with OpenAI is producing measurable results with wins in the insurance sector. We continue to grow our dedicated Google Cloud business unit. In collaboration with Google Cloud, we continue to increase the number of Gemini enterprise projects that we are actively engaged in. Each engagement follows a production-grade reference architecture with explicit safety and audit controls, ensuring that pilot outcomes can be migrated into compliant enterprise environments. One of these projects involves a leading UK bank, where we are rolling out AI-enabled digital assistants that give employees fast, secure access to internal and market data. Early pilot results indicate shorter query resolution times and improved policy compliance, laying a foundation for institution-wide adoption of agentic workflows. We also continue to strengthen our partnership with Salesforce by investing in agentic AI and innovation with a focus on applying agent force across Salesforce's core clouds to assist customer facing teams, streamline operations and unlock new levels of engagement and productivity. This reflects Endava's commitment to staying at the forefront of Salesforce innovation and helping clients turn emerging AI capabilities into real measurable impact. And now with an update on our large strategic deals, defined as multi-year, large-scale engagements. In addition to the multi-year payments deal I mentioned earlier, we deepened our engagement with Convex, an international specialty reinsurer, by signing a new agreement. This builds on the success we have achieved together in recent years, as Convex continues to invest in innovative technology and deliver consistently high-quality service. This partnership enables us to deliver a range of capabilities, enabling Convex to continue creating a business that has data at its heart and a strong emphasis on analytics to make better underwriting decisions. In mobility, we have extended and expanded our longstanding partnership with Toyota Racing Development as their official IT consulting partner in 2026 and beyond. As part of the partnership, Endava will leverage its AI-enabled accelerators and frameworks to modernize core Toyota racing development production systems and enable digital transformation for the business. Next, let me outline how our delivery model is evolving and what that means for execution and client outcomes. The pace of AI innovation remains exceptionally fast and the nature of our client discussions has evolved just as quickly. Where a few courses ago we were explaining foundational concepts such as intelligent agents, we are now examining how those agents can be deployed to deliver measurable efficiency across customer facing and core operations. Clients are starting to move beyond the search for a single killer application and are instead seeking opportunities to embed AI throughout their technology stacks and operating models. This marks the beginning of the transition from chasing incremental changes brought about by embracing AI to notable productivity changes. We're now spending time shaping larger scale projects that can only be delivered through the strategic adoption of AI. Purpose-built for an environment in which autonomous software agents participate in delivery, DAVA Flow treats Flow as the next progression beyond Agile by embedding AI into every activity. The delivery lifecycle is organized into four sequential yet feedback-linked phases, Signal, Explore, Govern, and Evolve. Throughout all phases, human oversight, or human in the loop, guides AI contributions, and the system learns and improves with each cycle. In Signal, we deploy market and estate scanning agents to surface and qualify opportunities. The agent reacts to signals in the market or client environment and feeds qualified opportunities into the lifecycle with confidence scores. In Xplore, we use human AI collaboration to convert these signals into evidence solution designs, producing prototypes, requirements, and models at pace. The aim is to reduce uncertainty and finalize what needs to be built, supported by evidence. In Govan, we assemble and automate the build. Engineer oversight combines with agent-generated code to enforce best-in-class controls. Evolve is the post-deployment phase where the solution is in production with continuous improvement. Human-in-the-loop checkpoints span every phase so that each iteration strengthens the next. AI agents watch the system's telemetry, user behavior, and performance data to detect anomalies or opportunities. Across the four phases, We take our lifetime experience of distributed agile at scale and optimize our approach to best organize agents at work with agentic checkpoints and humans in the loop at the core of the new approach. We've equipped our teams with playbooks and training materials, and all delivery teams are expected to complete Endava Flow training and immersion before the close of the current financial year. We ended the quarter with 11,636 Indarvans, representing a 2% decrease from the same period last year. We are deepening our AI talent pool and embedding new capabilities across the business, positioning Indarva to help clients turn emerging technology into near-term operational gains. We're expanding and upskilling our AI talent while trimming roles where market demand has declined. Our inaugural DavaX Academy created to train the next generation of AI skilled professionals through 2,900 applicants and resulted in 470 hires across nine delivery locations. And our recent TechFest engineering event brought together those new hires working in 48 cross-functional teams to address 24 client-inspired challenges. every team produced a working minimal viable product under mental guidance before we conclude i want to recognize every endowment for the perseverance and focus you continue to show as we steer through this period of rapid digital evolution and translate change into opportunity our priorities remain clear sustained growth that endures safeguard the distinctive culture that defines us, and deliver technology solutions that equip our clients to set the pace confidently in an ever-shifting market. I'll now hand over to Mark for a closer look at our quarterly financial results and guidance for the upcoming quarter and the remainder of the fiscal year.