Why Endava Stock Was Tanking on Tuesday
Key Points
The U.K. company didn't earn as many pounds as hoped.
It missed on both the top and bottom lines in its opening quarter of fiscal 2026.
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Endava (NYSE: DAVA) stock was going through quite a slog on Tuesday, as investors disseminated the company's latest quarterly results and obviously found them wanting. In mid-session trading that day, the shares were down a queasy 25%-plus in price, at a point when the S&P 500 (SNPINDEX: ^GSPC) was rising by 0.3%.
A quarter of struggle
For the first quarter of its fiscal 2026, U.K.-based Endava posted revenue of just over 178 million British pounds ($234 million), which was down by almost 9% year over year.
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Net income not according to international financial reporting standards (IFRS) declined more precipitously, tumbling to 9.9 million pounds ($13 million) against first-quarter 2025 profit of 19.2 million pounds ($25.3 million). Earnings per share (EPS) amounted to 0.15 pounds ($0.20).
Both line items failed to meet their consensus analyst estimates. On average, pundits tracking Endava stock were expecting the company to earn nearly 189 million pounds ($249 million) on the top line, and post a non-IFRS (adjusted) EPS of 0.18 pounds ($0.24).
Management acknowledged that the quarter was a disappointing one. It quoted CEO John Cotterell as explaining that it stemmed from "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."
Guiding for lower revenue
Endava also proffered guidance for its current (second) quarter, and the entirety of fiscal 2026. For the latter period, it's anticipating revenue will land at 735 million to 752 million pounds ($968 million to $990 million), which at the low end of the range is nearly 3% below the fiscal 2025 tally. Adjusted EPS is forecast at 0.80 pounds to 0.88 pounds ($1.05 to $1.16).
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Endava Plc. The Motley Fool has a disclosure policy.
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