Shares of Endava Ltd (DAVA) plummeted 17.47% in early trading on Wednesday following the release of its third-quarter fiscal year 2025 results and significantly lowered guidance for the fourth quarter and full year. The UK-based technology services provider faced challenges in the current business environment, leading to slower revenue growth and reduced expectations for the upcoming periods.

Endava reported Q3 revenue of £194.8 million, representing an 11.7% year-over-year increase. However, this figure fell short of the FactSet consensus estimate of £197.6 million. The company cited a challenging business environment, with clients showing reluctance to sign larger contracts amid economic uncertainties. CEO John Cotterell noted, "The opportunity pipeline continues to grow but the conversion into revenue is not happening as we would have expected."

Adding to investors' concerns, Endava provided lower-than-expected guidance for its fiscal fourth quarter and full year 2025. The company now expects Q4 revenue to be in the range of £186.0 million to £188.0 million, significantly below the FactSet estimate of £201.6 million. Q4 adjusted earnings per share are projected to be between £0.22 and £0.24, well below the FactSet estimate of £0.34. For the full fiscal year 2025, Endava trimmed its adjusted earnings guidance to £1.11 to £1.13 per share from the previous £1.20 to £1.23, and lowered its annual revenue guidance to £771.5 million to £773.5 million from £795 million to £800 million previously. These revisions fell short of analyst expectations, contributing to the sharp sell-off in Endava's stock.