Here is Why Endava (DAVA) is One of the Underperforming Tech Stocks to Buy According to Analysts
Endava (NYSE:DAVA) reported FQ3 2026 revenue of £178.5 million, down 8.4% year over year, citing uneven demand and longer deal cycles. The company recorded a £364.6 million goodwill impairment and related tax charges, resulting in a diluted loss per share of £7.55. For FQ4, it expects revenue of £181.0–£185.0 million and adjusted diluted EPS of £0.09–£0.13.
How this was made
The 30-second read
Why it matters
Traders can reassess valuation and positioning based on the explicit FQ4 revenue range and next-quarter adjusted diluted EPS range, alongside the AI revenue mix improvement.
Market read
Earnings/guidance datapoints (loss, impairment, and forward ranges) dominate the trading setup; AI revenue mix growth is the main offset.
What to watch
The article highlights impairment and deferred tax charges but provides limited detail on cash flow, backlog, or margin trajectory—key drivers for whether guidance is a temporary trough.
Background
Endava’s FQ3 2026 update included revenue decline, impairment-related charges, and a strategic pivot toward AI-native delivery.
Ticker impact
Endava reported FQ3 2026 revenue down 8.4% YoY and a £364.6M goodwill impairment, plus guided FQ4 revenue and EPS ranges.
Near-term downside bias as guidance implies continued YoY revenue decline and EPS weakness, partially offset by rising AI-native revenue share.
The text includes specific quarterly results and forward ranges (revenue £181.0–£185.0M; adjusted diluted EPS £0.09–£0.13) plus large impairment/loss figures, which typically drive trading around earnings/guidance.
Market effects
Signals ongoing pressure in digital transformation/IT services demand cycles, while AI-native delivery is being positioned as a partial growth offset.
Primarily impacts UK-headquartered tech services sentiment and UK-listed investor perception of AI services monetization.
Read-across for global IT services peers on deal-cycle length and AI-driven revenue mix transition.
Counterpoint
AI-native revenue share rising from 5% to 15% could eventually stabilize growth even if near-term revenue and EPS remain weak.
Key entities
- companyEndava
Reported FQ3 2026 results with revenue down 8.4% YoY, £364.6M goodwill impairment, and provided FQ4 revenue and next-quarter adjusted EPS guidance.
- partnerMastercard
Named as a new partnership supporting Endava’s AI-driven business growth.
- partnerNatWest
Named as part of a partnership (via Tyl) supporting Endava’s AI-driven business growth.
