The magnitude of the goodwill impairment and deferred tax asset write-off signals management's own lowered long-term outlook. With revenue declining, margins compressing, and guidance pointing to continued contraction, the stock faces significant headwinds. Monitor Q4 FY2026 results for any stabilization in constant currency revenue trends and watch for further restructuring or asset impairment charges.
Price Chart
Executive Summary
Endava reported Q3 FY2026 results with an 8.4% YoY revenue decline to £178.5M, a net loss of £394.4M driven by a £364.6M goodwill impairment and full UK deferred tax asset derecognition of £23.2M. Adjusted diluted EPS collapsed to £0.05 from £0.34. Guidance for Q4 FY2026 implies continued YoY revenue decline of 1-3.5% at constant currency. The company is pivoting to AI-native delivery (15% of revenue vs 5% a year ago) but this has not offset the core business deterioration.
Key Facts
- Q3 FY2026 revenue declined 8.4% YoY to £178.5M (6.4% at constant currency)
- Diluted EPS of (£7.55) vs £0.18 in prior year; adjusted diluted EPS £0.05 vs £0.34
- Goodwill impairment of £364.6M recognized due to underperformance and lowered forecasts
- Full UK deferred tax asset of £23.2M derecognized
- Adjusted PBT margin collapsed to 1.8% from 12.6% a year ago
- Net cash used in operations of (£0.4M) vs £18.7M generated in prior year
- Q4 FY2026 guidance: revenue £181-185M, constant currency decline of 1-3.5% YoY
- Full FY2026 guidance: revenue £721.8-725.8M, constant currency decline of 5-6% YoY
- AI-driven business grew to 15% of revenue from 5% a year ago
- Share repurchase program has $28.1M remaining as of March 31, 2026
Financial Impact
Revenue decline of £16.3M YoY in Q3; goodwill impairment of £364.6M; adjusted PBT margin fell from 12.6% to 1.8%
Risk Factors
- Continued revenue decline and margin compression as clients scrutinize IT spending
- Further goodwill or intangible asset impairments if forecasts deteriorate
- Inability to convert AI pivot into meaningful revenue growth to offset core declines
- Cash burn from negative operating cash flow and debt service obligations
- Potential need for additional financing or equity dilution
Market Snapshot
Investment Themes
Documents Analyzed
This report is based on 6 SEC documents filed with EDGAR.
| Document | Accession Number |
|---|---|
| 6-K Filing (Primary) | 0001656081-26-000015 |
| Document: earningspresentationpdf_.htm | 0001656081-26-000015 |
| Document: a6-kq3fy26.htm | 0001656081-26-000015 |
| Document: 0001656081-26-000015-index-headers.html | 0001656081-26-000015 |
| Document: 0001656081-26-000015-index.html | 0001656081-26-000015 |
| Document: 0001656081-26-000015.txt | 0001656081-26-000015 |
Track record builds as more directional reports settle.
Filters
| Type | Now | ||||
|---|---|---|---|---|---|
Sep 21, 2026 5w ago | 6-K | $2.11 $2.19 | ▼ −3.79% | ▼ −4.35% | $2.05 (+2.84%) |
May 21, 2026 22w ago | 6-K | $3.34 $2.69 | ▲ +19.61% | ▲ +19.94% | $2.05 (+38.62%) |
Mar 30, 2026 30w ago | 6-K | $4.37 $4.20 | ▲ +3.89% | ▲ +16.49% | $2.05 (+53.09%) |
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