Shares of Endava Ltd (DAVA) plummeted 17.47% in Wednesday's trading session following the release of its third-quarter fiscal year 2025 results and significantly lowered guidance for the fourth quarter and full fiscal 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 adjusted earnings per share to range between £0.22 and £0.24, significantly 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, falling short of analysts' expectations of £1.18. The company also lowered its annual revenue guidance to the range of £771.5 million to £773.5 million, down from the earlier projection of £795 million to £800 million. These downward revisions in guidance, coupled with the revenue miss, appear to be the primary drivers behind the stock's sharp decline. Despite these challenges, Endava's board of directors has authorized an additional $50 million share repurchase program, signaling confidence in the company's long-term strategy and cash flow outlook.