Endava Shares Plunge 4.42% to Record Low Amid Earnings Miss and Macroeconomic Pressures

Endava (DAVA) shares fell to a record low on Monday, with the stock experiencing an intraday decline of 4.42%. The selloff follows a broader trend of volatility, as the company has faced persistent challenges in meeting investor expectations and navigating macroeconomic headwinds.

Recent financial results underscore the pressure on the stock. Despite exceeding earnings per share estimates, Endava missed revenue targets and reported a net income of $1.17 million for the quarter. Management’s cautious guidance for fiscal 2026, which highlighted slower revenue growth and client hesitation, further eroded confidence. This has compounded a year-long decline of 66%, reflecting deepening skepticism about the company’s ability to deliver consistent performance.

Macroeconomic factors continue to weigh on the business. Clients, particularly in financial services, have delayed projects and reduced spending amid inflationary pressures and high interest rates. Rising borrowing costs have also strained Endava’s finances, with net interest expenses reaching $4.89 million in FY2025. These conditions have created a challenging operating environment, complicating efforts to stabilize revenue streams.

While Endava reported a record order book, execution risks persist. The company’s focus on AI-driven services and large-scale modernization projects remains a long-term growth lever, but delayed sales cycles and reliance on high-margin contracts have hindered near-term revenue realization. Investors remain wary of a history of unmet targets, with the stock historically dropping by 10% following earnings misses.

Operational inefficiencies further cloud the outlook. High operating expenses, including $42.64 million in costs for FY2025, highlight struggles with cost management. Despite a share buyback program aimed at boosting shareholder value, the move has failed to restore confidence, as structural challenges—including competition from in-house AI solutions—threaten to erode demand for Endava’s services.

Management is pivoting toward securing longer-term contracts and leveraging AI platforms like Morpheus and Compass. However, execution risks and client budget constraints remain significant hurdles. The next critical test will be Endava’s ability to deliver on its fiscal 2026 guidance, which will determine whether the company can regain traction in a competitive and uncertain market.