Recent IPO Endava (DAVA) is trading slightly higher after it reported Q4 (Jun) earnings results this morning. Since you're probably not familiar, a little background would help. Endava is a UK-based next-generation technology services provider. It helps clients undertake digital transformations. From proof of concept, to prototype, to production, Endava uses its engineering expertise to deliver enterprise platforms capable of handling millions of transactions per day.
At the core of Endava's approach is its proprietary Distributed Enterprise Agile scaling framework, known as The Endava Agile Scaling framework, or TEAS. Endava has a deep familiarity with many technologies, including mobile connectivity, social media, automation, big data analytics and cloud delivery, as well as next-generation technologies such as IoT, artificial intelligence, machine learning, augmented reality, virtual reality and blockchain.
Technological transformation poses numerous challenges for companies. These companies are often laden with legacy infrastructure and applications that are deeply embedded in core systems. While companies have historically looked to traditional IT service providers to undertake technology development projects, these traditional players are more focused on legacy systems using offshore delivery. Endava's expertise spans the ideation-to-production spectrum across three broad areas: Digital Evolution, Agile Transformation and Automation.
Endava, which is based in London, provides services from its nearshore delivery centers, located in two EU countries (Romania and Bulgaria), three other Central Europe countries (Macedonia, Moldova and Serbia), and four countries in Latin America (Argentina, Colombia, Uruguay and Venezuela). Endava has close-to-client offices in four Western European countries (Denmark, Germany, the Netherlands and the UK) as well as in the US. Endava currently has 4,700 employees, approximately 53.7% of whom work in nearshore delivery centers in EU countries. Endava has 249 active clients.
Turning to the Q4 (Jun) results, adjusted EPS grew 36% YoY to £0.15, which was in-line with market expectations. Revenue rose 43.0% year/year to £61.5 mln, which was below expectations. Given the timing of the reporting for the quarter, the company says it's unable to provide guidance for Q1 (Sep) and for the fiscal year 2019. However, the company plans to provide guidance for both Q2 (Dec) and FY19 when it reports Q1 (Sep) results.
Endava does not provide a lot of detail in its press release, but they say they are pleased with their JunQ results which reflected strength with existing customers as well as new. The integration of Velocity Partners in North America is proceeding smoothly. DAVA went on to say its strong client relationships contributed significantly to its constant currency revenue growth of 44.2% and gives them good visibility into the next quarter.
In addition to earnings, Endava also announced a partnership with Bain & Co. The goal is combining Bain's management consulting services with Endava's strategy-led enterprise delivery and next-gen technology services. With technology playing an increasingly critical role in every aspect of business, companies recognize that they need to accelerate the development of digital platforms to ensure they remain on the competitive vanguard.
The Bain-Endava partnership brings together skills in business and technology strategy, product ideation, technology development and deployment, and organizational change management to help support clients through successful transformations. This partnership should allow Endava to drive far more business impact for its clients.
As an indication of commitment to the partnership, Bain & Co. has taken an ownership stake in Endava via its July 2018 IPO. Additionally, Endava will become part of the Bain Alliance Ecosystem. By virtually connecting Bain's more than 8,000 consultants with Endava's deep next-gen technology and engineering expertise, DAVA believes the collaboration represents a step-change in the way both businesses address the needs of the market.