Why did DAVA's Q4 2024 EPS decline sharply?

The decline in Endava's (DAVA) Q4 2024 EPS can be attributed to several key factors: 1. **Revenue Decline**: Endava experienced a 6.8% year-on-year revenue decrease to £740.8 million for FY2024, which is a significant factor in the decline of EPS. This decrease in revenue is a result of challenging market conditions, particularly in the UK market and the Payments industry vertical. The company has been affected by uncertain macroeconomic conditions, which have led to hesitancy among clients and slower progress on large deals. 2. **Profit Margin Compression**: The company's profit margin compressed significantly, with a decrease from 12% in FY2023 to 2.3% in FY2024. This reduction in profit margin directly impacts the EPS, as the net income (which is a component of EPS) has decreased substantially. 3. **Strategic Investments**: Endava has been investing in strategic initiatives, including the acquisition of GalaxE Solutions for $405 million to strengthen its healthcare vertical and establish delivery capabilities in India. Such investments often lead to short-term strain on financial performance as they require upfront costs without immediate returns. In summary, the decline in DAVA's Q4 2024 EPS is primarily due to a combination of revenue decrease and profit margin compression, which in turn are influenced by strategic investments and challenging market conditions. |code|Ticker|Name|Date|Diluted EPS YoY|market_code| |---|---|---|---|---|---| |DAVA|DAVA.N|Endava|2024 Q1|-58.1145385959469|169| |DAVA|DAVA.N|Endava|2024 Q2|-43.18443831567952|169| |DAVA|DAVA.N|Endava|2024 Q3|-107.29762193502188|169|