Endava plc Q3 2026 Earnings Recap

Endava's shares declined 16.8% after the company reported a disappointing quarter marked by slower-than-expected pipeline conversion and a cautious outlook driven by macroeconomic headwinds, delayed projects in the Middle East, and prolonged execution of large contracts.

Key Takeaways

• Revenue missed expectations due to delayed client work in the Middle East amid ongoing conflict and weaker overall demand driven by an uncertain macroeconomic environment.
• Large, complex outcome-based contracts took longer to close than anticipated, contributing to a lowered Q4 revenue guide.
• The company recorded a significant noncash goodwill impairment of GBP 364.6 million, reflecting challenges in near-term execution but not impacting liquidity or operational capacity.
• Endava is accelerating its strategic pivot towards AI-native delivery, with AI-driven revenues growing from 5% to 15% of total revenue year-over-year (GBP 27 million in Q3 FY26), supported by expanded partnerships including Mastercard, OpenAI, and Google.
• Despite execution headwinds, management highlights progress in transforming its go-to-market model and deepening client engagement around scalable AI solutions, though near-term demand remains uneven.