Endava expects adjustments equal to 2% to 4% of 2025 revenue and will restate results
Key Facts
Endava said expected adjustments to fiscal 2026 revenue are equivalent to about 2% to 4% of fiscal 2025 revenue, and that it will restate results for prior financial periods following an audit committee investigation. The company said the adjustments are not expected to affect 2025 results, while the periods that should no longer be relied upon include the quarter ended September 2025, the first and second quarters, and the first and third quarters of fiscal 2026. The update followed concerns raised by external auditors about the accounting treatment of certain customer and supplier agreements and related matters. Endava said some agreements entered into in 2026 with counterparties that were both customers and suppliers lacked economic substance, or were negotiated and priced as a single arrangement. Those counterparties represented about 1.5% of the customer base as of March 31, 2026, the company said.
Endava said the restatement will include non-cash adjustments to certain balance sheet accounts, including accounts related to revenue adjustments, goodwill and intangible assets, and will reduce adjusted profit before tax. It added that it expects to report one or more material weaknesses in internal control over financial reporting, after identifying deficiencies in the control environment, including those related to tone at the top. The company plans to strengthen its accounting and reporting procedures, hire additional qualified finance staff, and improve governance and training. It will provide details of its remediation plan in its annual report. It also said it is assessing the impact of the adjustments on its prior compliance with revolving credit facility covenants and is in discussions with lenders, while estimating cash and cash equivalents at about 55 million pounds sterling as of September 30, 2026.
The update was accompanied by changes in senior management; Chief Financial Officer Mark Thurston resigned from his role and the board effective October 25, 2026, while General Counsel and Company Secretary Rohit Boothalingam resigned effective October 26. The board had appointed Connor McShane of AlixPartners as interim chief financial officer and assigned him the duties of principal financial and accounting officer effective September 21, 2026, while placing Thurston on administrative leave during the investigation. Founder and Chief Executive John Cotterell informed the board of his decision to retire from his role on October 19, 2027. Rob Machin will become interim chief executive and an executive director effective November 2, 2026. Endava serves payments, insurance, banking, capital markets, technology, media and telecommunications, healthcare, mobility, retail and consumer goods, and had 11,225 employees as of March 31, 2026.
Endava said its previous guidance for the fourth quarter and fiscal 2026 should no longer be relied upon, and that it does not expect to file its annual report by the November 2, 2026 deadline and intends to notify the U.S. Securities and Exchange Commission of the delay. The company had said in an earlier filing that it intended to publish results and file the report by that date, but said in its latest update that the timetable could no longer be met. It will announce the date for its results release and conference call once determined, and will inform investors of the timetable for fiscal first-quarter 2027 results after filing its annual report. This comes as 2025 results showed annual revenue growth of 4.3% to 772.3 million pounds sterling, compared with a 3.9% decline in fourth-quarter revenue to 186.8 million from 194.4 million. In the same year, profit before tax fell to 24.1 million pounds from 27 million, and adjusted profit before tax fell to 82.1 million from 83 million; the company also reported an 8.4% year-on-year decline in fiscal third-quarter 2026 revenue to 178.5 million pounds.
Endava had forecast in September 2025 fiscal 2026 revenue of between 750 million and 765 million pounds sterling, with constant-currency year-on-year change ranging from a decline of 1.5% to growth of 0.5%, before withdrawing that guidance in its latest update. In May 2026, Chief Executive John Cotterell said demand remained uneven across sectors, deal cycles had lengthened and clients were scrutinizing technology spending more closely, adding that revenue came in below expectations and margins contracted. According to Investing.com, citing an analyst at William Blair, the shares fell more than 10% after hours on September 22 following the announcement of the CFO transition and accounting investigation, amid the absence of a timetable for resolving the investigation. In the latest session covered by EL7 data, DAVA closed at 1.96 dollars on October 27, compared with a close of 2.05 dollars in the previous session. The company said the investigation is ongoing and that it does not intend to comment further until it is complete, to ensure the process remains fair.