Endava Expects Adjustments of Up to 4% of 2025 Revenue and Delays Annual Report
Key Facts
Endava said it does not expect to file its annual report for fiscal 2026 by the November 2 deadline and will restate the financial results reported for the year. The company initially estimated revenue adjustments equivalent to about 2% to 4% of fiscal 2025 revenue. It said results for several financial periods should not be relied upon until the restatement is complete. That means the November 2 announcement did not include new results or a beat of analyst expectations, contrary to what appeared in the initial version of the story. The company also said it will set a date later for publishing fourth-quarter and fiscal 2026 results.
The audit committee said its review covered errors in accounting for some agreements and separate errors in revenue recognition. The matter included agreements entered into during fiscal 2026 with parties that were both customers and suppliers of the company. The investigation concluded that some of those agreements lacked economic substance or were priced on the basis that they constituted a single arrangement. The counterparties represented about 1.5% of total customers as of March 31, 2026. Endava said the adjustments will also include non-cash balance-sheet items, including goodwill and intangible assets, reducing adjusted profit before tax.
The audit committee determined that results for the quarter ended September 30, 2025, should not be relied upon. The decision also applies to results for the quarters ended December 31, 2025, and the quarters ended March 31, 2026. The affected periods also include the three- and six-month periods ended in December, and the three- and nine-month periods ended in March. The company said it does not expect adjustments to fiscal 2025 results or restatements of prior fiscal years or periods within them. This estimate distinguishes the year targeted by the restatement from earlier periods that the company said it does not expect to adjust.
Endava is assessing the effect of the restatement on its past compliance with covenants under its revolving credit facility and is in discussions with lenders. The company estimated cash and cash equivalents at about £55 million on September 30, 2026. In its statement, the company did not specify the outcome of the covenant assessment or the status of discussions with lenders. The assessment comes as it works to recalculate revenue and profitability, as a reduction in adjusted profit before tax could change the financial picture for the relevant periods. It said the cash figure was an initial estimate for the period cited.
Management said it had identified deficiencies in its internal control environment and expects to report one or more material weaknesses in internal control over financial reporting. Chief Financial Officer and board member Mark Thurston resigned from both positions effective October 25, 2026. Connor McShane of AlixPartners continues to serve as interim chief financial officer. The review began after external auditors raised concerns about the accounting treatment of some customer and supplier agreements, according to the company’s filing with the U.S. Securities and Exchange Commission. The company had placed Thurston on administrative leave effective September 21, before announcing his resignation.
The company added that its remediation plan will include strengthening the control environment and changing accounting and reporting procedures, as well as hiring additional qualified finance staff and improving governance and training. The steps follow a period of weaker business activity: in the third quarter of fiscal 2026, revenue fell 8.4% year over year to £178.5 million. Adjusted diluted earnings per share were £0.05, compared with £0.34 in the same period a year earlier. The CEO at the time said demand remained uneven across sectors, deal cycles had lengthened and clients were scrutinizing technology spending more closely. Meanwhile, the share of business driven by AI rose from 5% of revenue in the third quarter of fiscal 2025 to 15% in the corresponding quarter of 2026.
Endava had forecast in May fiscal 2026 revenue of between £721.8 million and £725.8 million, with a 5% to 6% decline in constant-currency revenue, but later said the guidance was no longer reliable. Following the announcement in September of the CFO’s departure and the accounting investigation, the stock fell more than 10% after hours, according to Investing.com, citing an analyst at William Blair. EL7 data showed the stock closed at $1.58 on November 2, 2026. Endava said it will announce the timing of fourth-quarter and fiscal 2026 results and the related investor call when practicable. It will also inform investors of the fiscal 2027 first-quarter results schedule after filing the annual report.