Endava Ltd (DAVA) shares tumbled 7.85% in pre-market trading on Tuesday following the release of disappointing first-quarter fiscal year 2026 results. The UK-based technology services provider reported a significant year-on-year revenue decline and lowered its full-year guidance, raising concerns among investors about the company's near-term growth prospects.

According to the earnings report, Endava's revenue fell 8.6% year-over-year to £178.2 million in Q1 FY2026, or a 7.3% decline at constant currency. The company attributed this underwhelming performance to an unexpected client credit issue and certain pipeline opportunities failing to convert into revenue as anticipated. Diluted earnings per share also took a hit, dropping to £(0.15) from £0.04 in the prior year period, while adjusted diluted EPS decreased to £0.15 from £0.25.

Despite the challenging quarter, Endava announced a positive development in securing a multi-year strategic relationship with a leading payments company, valued at up to $100 million. However, this was not enough to offset the negative sentiment surrounding the results. The company has revised its full fiscal year 2026 guidance, now expecting revenue between £735.0 million and £752.0 million, representing a constant currency revenue change of between (4.5)% and (2.5)% year over year. The adjusted diluted EPS forecast for the year stands at £0.80 to £0.88, reflecting the ongoing pressures on the business.