Why Endava Stock Plummeted This Week

Endava (NYSE: DAVA) stock got hit with big sell-offs over the last week of trading. The company's share price fell 29.5% in a stretch of trading that saw the S&P 500 rise roughly 0.1% and the Nasdaq Composite decline 0.5%.

Endava's big sell-off this week stemmed from the publication of its results for the first quarter of its 2026 fiscal year -- a period that ended Sept. 30. The company published its Q1 numbers on Nov. 11, and substantial sales and earnings misses in the period resulted in a dramatic valuation contraction for its stock.

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Endava stock plummeted following weak performance in fiscal Q1

In the third quarter, Endava reported non-GAAP (adjusted) earnings of 0.15 British pounds ($0.20) on sales of 178.2 million pounds ($234.5 million). Sales unexpectedly declined 8.7% year over year in the period -- or 7.3% on a currency-adjusted basis. Revenue and earnings per share each fell short of the company's previous guidance, and management also lowered performance targets for the full year.

What's next for Endava?

Endava is now guiding for sales to be between 735 million pounds and 752 million pounds this year, suggesting an annual decline of 3.5% at the midpoint of the guidance range. The company had previously targeted sales of between 750 million pounds and 765 million pounds, with the midpoint of that guidance range representing an annual decline of 0.5%. Investors had been hoping for signs that the company's artificial intelligence (AI) strategies are paying off, but the recent quarterly report has called the forward trajectory on that front into question.

Keith Noonan 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.