Why Endava PLC – ADR (NYSE: DAVA) stock is crashing

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Endava PLC – ADR (NYSE: DAVA) stock plunged 13.22% on October 12th, 2018 (Source: Google finance) though the company reported 42.8% rise in the revenue for the fourth quarter ended June 30, 2018 of £61.5 million compared to £43.0 million in the same period in the prior year. Revenue growth rate at constant currency was 44.2%. Profit before tax in the fourth quarter was £6.7 million compared to £5.5 million in the same period in the prior year or 10.9% of revenue compared to 12.8% in the same period in the prior year. As of June 30, 2018, Endava had cash and cash equivalents of £15.0 million, compared to £23.6 million at the end of June 30, 2017. Net borrowings at June 30, 2018 were £4.7 million compared to £5.8 million at June 30, 2017. On completion of the IPO Endava received £40.2m net proceeds which has been partially used to repay all amounts outstanding on our bank facility.

Moreover, Headcount reached 4,819 with 4,340 average operational employees as of the quarter ended June 30, 2018. Number of clients with over £1 million in spend grew to 46 on a rolling twelve months basis compared to 34 at June 30, 2017. Top 10 clients accounted for 39% of revenue down from 47% as of the quarter ended June 30, 2017. By geographic region, 26% of revenue was generated in North America, 31% was generated in Europe and 43% was generated in the United Kingdom as of the quarter ended June 30, 2018. This compares to 15% in North America, 34% in Europe and 51% in the United Kingdom as of the quarter ended June 30, 2017. Revenue by sector was as follows for the three months ended June 30, 2018 on a rolling 12 Months basis, Payments and Financial Services 53%, TMT 28% and Other 19%. This compares to Payments and Financial Services 60%, TMT 28% and Other 12% for the three months ended June 30, 2017.

Meanwhile, At Beazley, the company is building an advanced proof of concept to extract metadata from incoming documents and then use this data to automatically classify and file the documents, reducing manual effort and increasing the consistency and accuracy of the process. Additionally, the company has opened a new delivery unit in Timisoara, Romania, a major university town last May. Timisoara is one of the four major university towns in Romania and was the only one where the company were not present. The company currently have 25 employees in this new location.

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