Endava Ltd (DAVA) shares are set to open sharply lower in pre-market trading, plummeting 7.85% following the release of its first quarter fiscal year 2026 results. The digital transformation consulting company reported a significant year-over-year revenue decline and lower earnings, falling short of market expectations.

For Q1 FY2026, Endava reported revenue of £178.2 million, representing an 8.6% year-on-year decline, or a 7.3% decline at constant currency. Diluted earnings per share fell to £(0.15), compared to £0.04 in the prior year period, while adjusted diluted earnings per share decreased to £0.15 from £0.25. The company attributed the disappointing results to an unexpected client credit issue and certain anticipated pipeline opportunities not converting into revenue as expected.

Despite the weak quarterly performance, Endava secured a multi-year strategic relationship with a leading payments company, valued at up to $100 million. Looking ahead, the company provided guidance for full fiscal year 2026, projecting 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. Adjusted diluted earnings per share are expected to be in the range of £0.80 to £0.88, indicating continued challenges in the near term.