Q3 2025 Endava PLC Earnings Call

Unknown Executive: Good day and welcome to Endava's third quarter of fiscal year 2025 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad.

Good day and welcome to in Davos third quarter of fiscal year, 'twenty 25 conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero on your telephone keypad after today's presentation.

Unknown Executive: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your telephone keypad. To withdraw your question, please press star then 2. Please note this event is being recorded.

<unk> there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to MS. Laura.

Laurence Madsen: I would now like to turn the conference over to Ms. Laurence Madsen, Head of Investor Relations and ESG at Endava. Please go ahead. Thank you.

Laura: Medicine head of Investor Relations and ESG at Indaba. Please go ahead.

Laura Medicine: Thank you good afternoon, everyone and welcome to end of the third quarter of fiscal year, 2020 five conference call.

Laurence Madsen: Good afternoon, everyone, and welcome to Endava's third quarter of fiscal year 2025 conference call. As a reminder, this conference call is being recorded.

Speaker Change: During this conference call is being recorded joining me today are John Cottrell, and Chief Executive Officer, and Mark Thurston and that as Chief Financial Officer.

Laurence Madsen: Joining me today are John Cotterell, Endava's Chief Executive Officer, and Mark Thurston, Endava's Chief Financial Officer. Before we begin, a quick reminder to our listeners. Our presentation and our accompanying remarks today include forward-looking statements, including but not limited to statements regarding our guidance for Q4 fiscal year 2025 and for the full fiscal year 2025, the impacts of headwinds facing our industry and business, our ability to capitalize on market opportunities and trends in our industry, including with respect to developments with AI, our addressable market, our expectations regarding the share repurchase program, enhancements to our technology and offerings, demand from clients for our technology services, our ability to create long-term value for our clients, our people, and our shareholders, and our business strategy, plans, operation, and growth opportunities.

Unknown Executive: Joining me today are John Cotterell, Endava's Chief Executive Officer, and Mark Thurston, Endava's Chief Financial Officer.

Speaker Change: Before we begin a quick reminder, to our listeners our presentation and our companion remarks today.

Unknown Executive: Before we begin, a quick reminder to our listeners. Our presentation and our accompanying remarks today include forward-looking statements, including but not limited to statements regarding our guidance for Q4 fiscal year 2025 and for the full fiscal year 2025, the impacts of headwinds facing our industry and business, our ability to capitalize on market opportunities and trends in our industry, including with respect to developments with AI or addressable market, our expectations regarding the share repurchase program, enhancements to our technology and offerings, demand from clients for our technology services, our ability to create long-term value for our clients, our people and our shareholders, and our business strategy, plans, operations, and growth opportunities.

Speaker Change: Forward looking statements, including but not limited to statements regarding our guidance for Q4 fiscal year 2025 and for the full fiscal year 2025, the impacts of headwinds facing our industry and business, our ability to capitalize on market opportunities and trends in our industry.

Speaker Change: Smoothing with respect to development with AI and addressable market our expectations regarding the share repurchase program and then sends to our technology and offerings.

Speaker Change: From clients from our technology services, our ability to create long term value for our clients, our people and our shareholders and our business strategy claims operation and growth opportunities.

Unknown Executive: These statements are subject to risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements, and reported results should not be considered as an indication of future performance. Please note that these forward-looking statements made during this conference call speak only as of today's date, and we undertake no obligation to update them to reflect subsequent events or circumstances other than to the extent required by law.

Operator 2: These statements are subject to risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements, and reported results should not be considered as an indication of future performance. Please note that these forward-looking statements made during this conference call speak only as of today's date, and we undertake no obligation to update them to reflect subsequent events or circumstances other than to the extent required by law.

Speaker Change: These statements are subject to risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statements actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward looking statements.

Speaker Change: And reported results should not be considered as an indication of future performance.

Speaker Change: Please note that these forward looking statements made during this conference call speak only as of today's date and we undertake no obligation to update them to reflect subsequent events or circumstances are different than to the extent required by law for more information. Please refer to the risk factors section of our.

Operator 2: For more information, please refer to the risk factors section of our annual report filed with the Securities and Exchange Commission on 19 September 2024, and in other filings that Endava makes from time to time with the SEC, including our current report on Form 6-K filed with the SEC on 28 March 2025. Also, during the call, we'll present both IFRS and non-IFRS financial measures. While we believe the non-IFRS financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IFRS. Reconciliations of such non-IFRS measures to the most directly comparable IFRS measure are included in today's earnings press release as well as the investor presentation, both of which you can find on our investor relations site or on the SEC website.

Unknown Executive: For more information, please refer to the Risk Factors section of our annual report filed with the Securities and Exchange Commission on September 19, 2024, and in other filings that Endava makes from time to time with the FCC, including our current report on Form 6K filed with the FCC on March 28, 2025.

Speaker Change: Reports filed with the Securities and Exchange Commission on September 19, 2024, and in other filings that <unk> made from time to time with the FCC, including our current report on form 6K filed with the SEC on March eight March 28 2025.

Unknown Executive: Also, during the call, we'll present both IFRS and non-IFRS financial measures. While we believe the non-IFRS financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IFRS. Reconciliations of such non-IFRS measures to the most directly comparable IFRS measure are included in today's earnings press release as well as the investor presentation, both of which you can find on our investor relations site or on the SEC website.

Speaker Change: Also during the call we'll present, both <unk> and non <unk> financial measures, we believe the non M. S alright.

Speaker Change: Alright financial measures provide useful information for investors. The presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with Ias Rs.

Speaker Change: Reconciliations of such non as far as measures to the most.

Speaker Change: Directly comparable <unk> measure.

John: In today's earnings press release, as well as your Investor presentation, both of which you can find on our Investor Relations site on the SEC website, a link to the replay of this call will also be available on our website with that I'll turn the call over to John.

Unknown Executive: A link to the replay of this call will also be available on our website.

John Cotterell: A link to the replay of this call will also be available on our website. With that, I'll turn the call over to John. Thank you, Laurence, and welcome, everyone. We appreciate you joining us for our Q3 FY25 earnings call. The business environment continues to evolve rapidly, and the quarter just ended has been challenging. We are witnessing what I would characterize as inconsistent behavior from some clients, with their business priorities shifting rapidly. By that, I mean that clients' desire to innovate remains strong. However, they are slow to sign large contracts in the current uncertain macroeconomic environment. Our slowing growth in the quarter was primarily driven by the weakening of the US dollar at the end of the quarter and some deals that did not get signed in North America and, to a lesser extent, in Asia-Pacific.

John Cotterell: With that, I'll turn the call over to John. Thank you, Laurence, and welcome, everyone. We appreciate you joining us for our third quarter fiscal year 2025 earnings call. The business environment continues to evolve rapidly. and the quarter just ended has been challenging. We are witnessing what I would characterize as inconsistent behavior from some clients with their business priorities shifting rapidly. By that, I mean that clients desire to innovate remains strong. However, they're slow to sign large contracts in the current uncertain macroeconomic environment. Our slowing growth in the quarter was primarily driven by the weakening of the US dollar at the end of the quarter and some deals that did not get signed in North America and to a lesser extent in Asia Pacific.

Speaker Change: Thank you Laura and welcome everyone.

Speaker Change: We appreciate you joining us for our third quarter fiscal year 2020 earnings call.

Speaker Change: The business environment continues to evolve rapidly.

So just and that has been challenging.

We are witnessing what I would characterize as inconsistent.

Speaker Change: Some clients with that business priority is shifting rapidly.

Speaker Change: By that I mean, the clients desire to innovate remains strong however.

Speaker Change: Or are you just signed large contracts in the current uncertain macroeconomic environment.

Speaker Change: A slowing growth in the quarter was primarily driven by the weakening of the U S. Dollar at the end of the cold Huh.

Speaker Change: And some deals that did not get signed in North America and to a lesser extent in Asia Pacific.

Operator 2: Mark will provide you with more details on our financial results shortly. Our pipeline of large opportunities continues to grow. However, with an increased level of global macroeconomic turbulence since our last earnings call, the pipeline is not converting into signed deals and thus into revenue at the rate we anticipated last quarter. In this uncertain environment, we are focusing on what we can control to best position the business for the long term. We continue to invest in the business while at the same time closely managing our expenses to protect our margins. We are also increasing our share buyback authorization by an additional GBP 50 million, which we believe is the optimum capital allocation tool for us in the current environment. We also plan to accelerate the pace of partnership formalization to enhance our solutions and further strengthen our value proposition.

Speaker Change: Mark will provide you with more details on our financial results shortly.

John Cotterell: Mark will provide you with more details on our financial results shortly. Our pipeline of large opportunities continues to grow. However, with an increased level of global macroeconomic turbulence since our last earnings call, the pipeline is not converting into signed deals and thus into revenue at the rate we anticipated last quarter.

Speaker Change: Our pipeline of larger opportunities continues to grow however.

Speaker Change: However, with an increased level of global macroeconomic turbulence since our last earnings call. The pipeline is not converting into signed deals.

Speaker Change: This into revenue at the rate, we anticipated last quarter.

John Cotterell: In this uncertain environment, we are focusing on what we can control to best position the business for the long term. We continue to invest in the business, while at the same time closely managing our expenses to protect our margins. We're also increasing our share buyback authorization by an additional $50 million, which we believe is the optimum capital allocation tool for us in the current environment. We also plan to accelerate the pace of partnership formalization to enhance our solutions and further strengthen our value proposition. These partnerships are already contributing to deal flow and delivering opportunities.

Speaker Change: In this uncertain environment, we are focusing on what we can control.

Speaker Change: Best position the business for the long term.

Speaker Change: We continue to invest in the business while at the same time closely managing our expenses to protect our margins.

Speaker Change: We are also increasing our share buyback authorization.

Speaker Change: The additional $50 million, which we believe is the optimum capital allocation tool for us in the current environment.

Speaker Change: We also plan to accelerate the pace of partnership formalization to enhance our solutions and further strengthen our value proposition.

Operator 2: These partnerships are already contributing to deal flow and delivering opportunities. Just a few weeks ago, we announced our pioneering involvement in OpenAI's exclusive beta services partner program. Together, we have already developed industry-first products and solutions for multiple joint clients. We are extremely excited about this next step in our journey with OpenAI. Last week, we announced that we are an implementation partner for Google Agentspace, a powerful platform that enables enterprises to embed intelligent, proactive agents across their workflows. At its core, Agentspace offers a multimodal search agent that serves as a central conversational interface for accessing enterprise knowledge. With AlixPartners, a global consulting firm, we are excited to announce our strategic partnership, building on over 15 years of successful collaboration across some of the most complex and high-impact digital transformation programs globally.

Speaker Change: These partnerships are already contributing to deal flow and delivering opportunities.

John Cotterell: Just a few weeks ago, we announced our pioneering involvement in OpenAI's exclusive beta services partner program. Together, we have already developed industry-first products and solutions for multiple joint clients.

Speaker Change: Just a few weeks ago, we announced our pioneering involvement and opened exclusive beta services partner program.

Speaker Change: We have already developed industry first products and solutions for multiple joint clients extremely excited about this next step.

John Cotterell: We're extremely excited about this next step in our journey with OpenAI.

Speaker Change: Our journey with our NII.

John Cotterell: Last week, we announced that we are an implementation partner for Google Agent Space. A powerful platform that enables enterprises to embed intelligent, proactive agents across their workflows. At its core, AgentSpace offers a multimodal search agent that serves as a central conversational interface for accessing enterprise knowledge.

Speaker Change: Last week, we announced that we are in the implementation partners include Google agent space.

Speaker Change: Our full platform that enables enterprises to embed intelligence proactive agents across their workflows.

Speaker Change: It's cool agent space offers a multimodal search engines.

Speaker Change: Serves as a central conversational interface for accessing enterprise knowledge.

John Cotterell: With Alex Partners, a global consulting firm, we're excited to announce our strategic partnership, building on over 15 years of successful collaboration across some of the most complex and high impact digital transformation programs globally. This partnership is designed to address the full spectrum of client needs. from strategic formulation and diagnostic assessment to technology, design, implementation and scaling. Our joint approach ensures that clients benefit not only from the high level strategic insight, but also from seamless execution that turns vision into tangible results, bridging the critical gap between strategic vision and technological realization.

Speaker Change: With Alixpartners a global consulting firm, we are excited to announce a strategic partnership building.

Speaker Change: 15 years of successful collaboration across some of the most complex and high impact digital transformation programs globally.

Operator 2: This partnership is designed to address the full spectrum of client needs, from strategic formulation and diagnostic assessment to technology design, implementation, and scaling. Our joint approach ensures that clients benefit not only from the high-level strategic insight but also from seamless execution that turns vision into tangible results, bridging the critical gap between strategic vision and technological realization. We've also partnered with SideFX, a leading developer of Houdini 3D procedural animation and visual effects software. The partnership combines our machine learning expertise and synthetic data with SideFX's renowned VFX software suite for simulation and procedural content creation. This process is particularly crucial for fields where precision and realism are key to innovation, like manufacturing line inspection and autonomous vehicle training. We've built a strong partnership with Backbase, a leader in engagement banking across both R&D and implementation streams.

Speaker Change: This partnership is designed to address the full spectrum of client needs from strategic formulation and diagnostic assessments.

Speaker Change: Knowledge design implementation on Skylake.

Speaker Change: A joint approach ensures that clients benefit not only from the high level strategic insights, but also from seamless execution that turns vision into tangible results, bringing the critical gap between strategic and technological realization.

John Cotterell: We've also partnered with SideFX, a leading developer of Houdini 3D procedural animation and visual effects software. partnership combines our machine learning expertise and synthetic data with SideFX's renowned VFX software suite for simulation and procedural content creation. This process is particularly crucial for fields where precision and realism are key to innovation, like manufacturing line inspection and autonomous vehicle training.

Speaker Change: We are also called with side effects, a leading developer of few dini three D procedural animation and visual effects software, but partnership combines machine learning expertise and synthetic data with side FX has renowned FX software suite the simulator.

Speaker Change: And procedural content creation. This process is particularly crucial sales where precision and realism.

Speaker Change: Pizza innovation.

Speaker Change: Manufacturing line inspection autonomous vehicle driving.

John Cotterell: We've built a strong partnership with BlackBase, a leader in engagement banking across both R&D and implementation streams. To date, we have jointly delivered digital banking solutions for seven banks, reinforcing Endava's role as a trusted and capable implementation partner. Our work has helped transform retail banking services by delivering comprehensive digital capabilities ranging from web and mobile retail and corporate banking applications to digital lending solutions. AI remains a priority for many of our clients, and we continue to help them navigate their AI journey.

Speaker Change: We've built a strong partnership with bank base, a leader in engagement banking across both R&D and implementation strange.

Operator 2: To date, we have jointly delivered digital banking solutions for seven banks, reinforcing Endava's role as a trusted and capable implementation partner. Our work has helped transform retail banking services by delivering comprehensive digital capabilities ranging from web and mobile retail and corporate banking applications to digital lending solutions. AI remains a priority for many of our clients, and we continue to help them navigate their AI journeys. Let me take you through a few recent examples. In our ongoing collaboration with a leading global pharmaceutical company, our engagement has focused on refining their processes relating to regulatory clinical trial submissions, where precision, reliability, and speed are paramount. Facing the challenge of exceeding a rigorous accuracy benchmark measured against the output of a human clinical programmer, our team leveraged an advanced AI consensus mechanism enhanced by multi-shot training techniques designed to evaluate and capture an extensive amount of data.

Speaker Change: We have jointly deliver digital banking solutions for seven banks.

Speaker Change: <unk> and <unk> role as a trusted and capable implementation.

Our work has helped transform retail banking services, while until they bring comprehensive digital capabilities, ranging from web and low ball retail and corporate banking applications to digital lending solutions.

Speaker Change: <unk> remains a priority for many of our clients, we continue to help them navigate the jetty.

Speaker Change: Let me take you through a few recent examples.

John Cotterell: Let me take you through a few recent examples. In our ongoing collaboration with a leading global pharmaceutical company, our engagement has focused on refining their processes relating to regulatory clinical trial submission. where precision, reliability and speed are parallel. Facing the challenge of exceeding a rigorous accuracy benchmark measured against the output of a human clinical program. Our team leveraged an advanced AI consensus mechanism. Enhanced by multi-shot training designed to evaluate and capture an extensive amount of data. I'm pleased to report that across two pivotal data sets, we exceed the accuracy baseline by as much as 19%.

Speaker Change: And our ongoing collaboration with a leading global pharmaceutical company our engagement that's focused on refining that processes relating to regulatory clinical trial submissions.

Speaker Change: Physician reliability speed are paramount.

Speaker Change: The challenge of exceeding a rigorous accuracy benchmark measured against the output of a human clinical program at all.

Speaker Change: Our team leveraged on advanced AI consensus mechanism.

Speaker Change: By multi shops training techniques.

Speaker Change: Aligned to evaluate and capture an extensive amount of data.

John Cotterell: At the same time, reducing the time taken from hundreds of workdays to just a few hours. We believe this achievement embodies our AI driven approach and underscores our ability to deliver trusted high stakes outcomes in regulated environments.

Operator 2: I'm pleased to report that across 2 pivotal data sets, we exceed the accuracy baseline by as much as 19%, at the same time reducing the time taken from hundreds of workdays to just a few hours. We believe this achievement embodies our AI-driven approach and underscores our ability to deliver trusted, high-stakes outcomes in regulated environments. At one of the world's leading insurance groups, we've recently collaborated with 2 operations teams to illustrate the transformative impact AI can have on their daily operations. Through a series of targeted training sessions, we demonstrated how precision prompt engineering can unlock new levels of productivity and innovation. The result was accelerated workflows, reduced operational friction, and a clear path forward for integrating AI at scale. The enthusiasm and commitment demonstrated by the teams underscore the tangible benefits of embracing AI, marking a critical step forward in their digital transformation journey.

Speaker Change: I'm pleased to report that across two pivotal data sets, we exceed the accuracy baseline by as much as 19%.

Speaker Change: At the same time, reducing the time taken from hundreds of work days. So just a few hours.

Speaker Change: We believe this achievement in both of these are AI driven approach.

Speaker Change: Underscoring our ability to deliver trusted high stakes outcomes in regulated environments.

John Cotterell: At one of the world's leading insurance groups, we've recently collaborated with two operations teams to illustrate the transformative impact AI can have on their daily operation. Through a series of targeted training sessions, we demonstrated how precision prompt engineering can unlock new levels of productivity and innovation. The result was accelerated workflows, reduced operational friction, and a clear path forward for integrating AI at scale. The enthusiasm and commitment demonstrated by the teams underscore the tangible benefits of embracing AI, marking a critical step forward in their digital transformation journey.

Speaker Change: But one of the world's leading insurance groups. We've recently collaborated with two operations teams to illustrate the transformative impact can have on their daily operations.

Speaker Change: Series of targeted training sessions, we demonstrated have precision prompt engineering can unlock new levels of productivity and innovation. The result was accelerated workflows reduced operational friction and a clear path forward for integrating AI at scale.

Speaker Change: Yes, and commitment demonstrated by the teams under school the tangible benefits of embracing AI, marking a critical step forward in their digital transformation journey.

John Cotterell: In our continued work with a Premier Golf performance brand, we are powering a strategic shift from B2B to B2C. through AI-powered swing analysis and tailored coaching. We built a cutting edge video analysis platform capable of breaking down swing mechanics with precision. Using synthetic data and privacy-first design, our models detect biomechanical movement with remarkable accuracy, and we're now advancing the analysis of intricate swing characteristics. Tailored Coaching, we're developing an intelligent coaching one that combines historical data with real-time analysis to deliver personalized improvement plans. This agentic solution adapts to individual goals and harnesses insights from our video analysis.

Operator 2: In our continued work with a Premier Gulf performance brand, we are powering a strategic shift from B2B to B2C through AI-powered swing analysis and tailored coaching. We built a cutting-edge video analysis platform capable of breaking down swing mechanics with precision. Using synthetic data and privacy-first design, our models detect biomechanical movement with remarkable accuracy, and we are now advancing the analysis of intricate swing characteristics. For tailored coaching, we are developing an intelligent coaching agent, one that combines historical data with real-time analysis to deliver personalized improvement plans. This agentic solution adapts to individual goals and harnesses insights from our video analysis. What was once reserved for elite athletes is now scalable for a wider audience. Through this engagement, our dedicated product team has also worked closely with the client to refine the product strategy and overall consumer experience, from app functionality to market positioning.

Speaker Change: And our continued work with a premier Gulf performance brand, we are pairing our strategic shift from database debate to say.

Speaker Change: Hi, Pat.

Speaker Change: Oh, it's swing analysis entitled Coach Inc.

Speaker Change: We built a cutting edge video analysis platform, okay, well, that's breaking down swing mechanics with precision.

Speaker Change: Using synthetic data and privacy first design all models detect by mechanical movement with remarkable accuracy and we now advancing the analysis of intricate swing characteristics.

Speaker Change: Coaching we are developing an intelligent coaching agents, while the combined historical data with real time analysis to deliver personalized improvement plans.

Speaker Change: Gentex solution adapts to individual goals and harnesses insights from our video analysis, what was once reserved elite athletes is now scalable for a wider audience.

John Cotterell: What was once reserved for elite athletes is now scalable for a wider audience. through this engagement. Our dedicated product team has also worked closely with the client to refine the product strategy and overall consumer experience from app functionality to market positioning.

Speaker Change: So as I said engagements.

Speaker Change: Our dedicated product team has also worked closely with the client to refine the product strategy and overall consumer experience from app functionality to market positioning.

John Cotterell: Our recent engagement with a top tier global services company showcased how generative AI can accelerate complex technical transformation. During a hackathon-style session, participants blended structure with speed while working in two Agile teams. One team tackled the upgrade of a 37-module Java application from Java 11 to 21, iterating AI-driven code improvements. The other team led a major migration over 1,000 into a modern data management framework using custom GPT workflows. team's reported productivity gains of 50 to 300% and a strong appetite to deepen AI integration, which is exactly the kind of transformation we aim to catalyze, hands on, high impact and forward looking.

Operator 2: Our recent engagement with a top-tier global services company showcased how generative AI can accelerate complex technical transformation. During a hackathon-style session, participants blended structure with speed while working in two agile teams. One team tackled the upgrade of a 37-module Java application from Java 11 to 21, iterating AI-driven code improvements. The other team led a major migration of over 1,000 entities into a modern data management framework using custom GPT workflows. Teams reported productivity gains of 50% to 300% and a strong appetite to deepen AI integration, which is exactly the kind of transformation we aim to catalyze, hands-on, high-impact, and forward-looking. Now, I'd like to provide you with an update on our recent successes in adding to our opportunity pipeline of larger and longer-term deals. On recent earnings calls, I've been highlighting the work we have been doing in securing these larger and longer-term deals.

Speaker Change: A recent engagement with a top tier global services company showcased how generous data AI can accelerate complex technical transformation.

Speaker Change: During a hackathon style session participants blended structure with speed well working into agile teams one team tackled the upgrade of the 37 module Java application from Java, 11% to 21, Iterating AI driven code improvements.

Speaker Change: The other team led a major migration over 1000 entities into a modern data management framework using custom J P. G workplace.

Speaker Change: <unk> reported productivity gains of 50% to 300%.

Speaker Change: Sorry to deepen the AI integration.

Speaker Change: Which is exactly the kind of transformation, we aim to capitalize hands on high impact and forward looking.

John Cotterell: Now I'd like to provide you with an update on our recent successes in adding to our opportunity pipeline of larger and longer term deals. On recent earning calls, I've been highlighting the work we have been doing in securing these larger and longer term deals. We consider these deals as being transformative for the relationships we build with our customers. Deals of this nature give us the ability to enter into true part discussions with our customers and elevate us beyond the technology domain into being relevant to the senior C-suite.

Speaker Change: Now I'd like to provide you with an update on our recent successes and adding to our opportunity pipeline is larger and longer term deals.

Speaker Change: On recent earnings calls I've been highlighting the work we've been doing in securing these larger and longer term deals. We consider these deals as being transformative for the relationships, we build with our customers deals of this nature gave us the ability to enter into a true partner discussions with our customers.

Operator 2: We consider these deals as being transformative for the relationships we build with our customers. Deals of this nature give us the ability to enter into true partnership discussions with our customers and elevate us beyond the technology domain into being relevant to the senior C-suite. I'm now going to take you through a few examples of deals that we're pursuing and have had recent successes with. In payments and banking, we've observed a key trend emerging around major global banks looking to modernize and reinvent their payments business and capabilities. We've started working with a number of banks in Europe and the Middle East. Our heritage in this space enables us to be able to engage knowledgeably with these banks about modern technology platforms as a driver of their payments business strategy. We are being increasingly trusted to design, build, run, and evolve entire payment platform ecosystems.

Speaker Change: And the elevate us beyond the technology domain into being relevant to the senior C suites.

John Cotterell: I'm now going to take you through a few examples of deals that we're pursuing and have had recent successes with. In payments and banking, we've observed a key trend emerging around major global banks looking to modernize and reinvent their payments business and capability. We started working with a number of banks in Europe and the Middle East. Our heritage in this space enables us to be able to engage knowledgeably with these banks about modern technology platforms as a driver of their payments business strategy. We are being increasingly trusted to design, build, run and evolve entire payment platform ecosystems. These deals are strategic and long term in nature and require engagement with the senior leadership.

Speaker Change: I'm now going to take you through a few examples of deals with the sharing and have had recent successes with.

Speaker Change: And payments and banking, we've observed a key trend emerging around major global banks looking to modernize and reinvent that payments business and capabilities.

Speaker Change: We started working with a number of banks in Europe, and the Middle East.

Speaker Change: Our heritage in this space enables us to be able to gauge knowledgeably with these banks about modern technology platforms as a driver of that payments business strategy.

Speaker Change: We are being increasingly trusted design build run an adult entire payment platform ecosystems. These deals are strategic and long term in nature and require engagement with the senior leadership.

Operator 2: These deals are strategic and long-term in nature and require engagement with the senior leadership. They call on our industry expertise, our approach to core modernization, our delivery capabilities, and our ability to reimagine an AI-enabled future. In a number of our verticals, industry consolidation has led to overlapping ecosystems with multiple vendors, creating overcomplexity, high maintenance costs, and delays in responding to market demands. We offer customers compelling insights to start addressing these challenges using our accelerators and tooling. We have recently engaged in discussions with a capital markets infrastructure company, a US healthcare company, and a global financial services institution to help modernize their systems, and these deals are in our opportunity pipeline. We continue to support a leading Fintech and payments provider in their strategic efforts to remediate technical debt and compete a major data center migration by fall 2025.

John Cotterell: They call on our industry expertise, our approach to core modernization, our delivery capabilities and our ability to reimagine an AI enabled future.

Speaker Change: Cool on our industry expertise our approach to call modernization deliver.

Delivery capabilities, and our ability to re imagine and AI enabled future.

John Cotterell: In a number of our verticals, industry consolidation has led to overlapping ecosystems with multiple vendors, creating over-complexity, high maintenance costs, and delays in responding to market demands. We offer customers compelling insights to start addressing these challenges using our accelerators and tooling.

Speaker Change: And a number of all the schools industry consolidation has led to overlapping ecosystems with multiple vendors, creating over complexity high maintenance costs and delays in responding to market demands.

Speaker Change: We offer customers compelling insights to start addressing these challenges using our accelerators and tooling.

John Cotterell: We have recently engaged in discussions with a capital markets infrastructure company, a US healthcare and a global financial services institution to help modernize their systems. And these deals are in our opportunity pipeline. We continue to support a leading fintech and payments provider in their strategic efforts to remediate technical debt and complete a major data center migration by fall 2025. Through our Ray and Impra accelerators, we are delivering an independent third party perspective to help resiliency risks and unlock opportunities to enhance application monitoring across the products and services they deliver to their customers.

Speaker Change: We have recently engaged in discussions with a capital markets infrastructure company, a U S health care company and a global financial services institution to help modernize their systems and these deals are in our opportunity pipeline.

Speaker Change: We continue to score a leading fintech payments provider in that strategic efforts to remediate technical debt and complete a major data center migration by fall 2025.

Operator 2: Through our RAE and Infra accelerators, we are delivering an independent third-party perspective to help resiliency risks and unlock opportunities to enhance application monitoring across the products and services they deliver to their customers. Some additional projects worth highlighting are the following. Our partnership with a leading financial institution in North America continues on a major core modernization initiative focused on reverse engineering and remediating three core banking platforms using our MAPS and Dash solutions. This engagement highlights our automation capabilities and enables our clients to modernize their platforms, eliminate technical debt, and introduce new features and enhance performance. We are also expanding our presence in the US healthcare sector with the addition of a new nationally recognized pharmacy benefit manager to our client roster.

Speaker Change: Ray and infra accelerators, we are delivering an independent third policy perspective to help.

Speaker Change: William C risks and unlock opportunities to enhance application monitoring across the products and services they deliver to their customers.

John Cotterell: Some additional projects worth highlighting are the following. Our partnership with a leading financial institution in North America continues on a major core modernization initiative focused on reverse engineering and remediating three core banking platforms using our maps and dash solutions. This engagement highlights our automation capabilities and enables our client to modernize their platforms, eliminate technical debt, and introduce new features and enhanced performance.

Speaker Change: Some additional projects worth highlighting are the following.

Speaker Change: Our partnership with a leading financial institution in North America continues on a major core modernization initiative focused on reverse engineering and Remediated three core banking platforms, using our maps and dash solutions.

Speaker Change: This engagement highlights automation capabilities and enables our clients modernize their platforms eliminate technical debt and introduce new features and it has performance.

John Cotterell: We are also expanding our presence in the US healthcare sector with the addition of a new nationally recognized pharmacy benefit manager to our client roster.

Speaker Change: We are also expanding our presence in the U S health care sector with the addition of a new nationally recognized pharmacy benefit manager to our client roster.

Operator 2: We launched a comprehensive benefit plan discovery phase using our Ray accelerator, paving the way for future initiatives to automate the creation and ongoing management of benefit plans. Now, for an update on our people and innovation, our recent Innovation Lab Global Final held in Belgrade in March brought together top Endava talent from around the world to showcase AI-driven solutions addressing real client challenges. Out of the many impressive entries, eight finalist teams competed, with Australia taking first place for an edge AI solution transforming healthcare. Germany secured second for bridging AI with diverse systems, and North Macedonia earned third for boosting digital accessibility through AI and open-source tools. Argentina's team won the crowd's heart with an AI-powered payment automation solution. Congratulations to all participants. Your innovation continues to drive Endava forward.

John Cotterell: We launched a comprehensive benefit plan discovery phase using our Ray Accelerator, paving the way for future initiatives to automate the creation and ongoing management of benefit plans.

Speaker Change: We launched a comprehensive benefit plan discovery phase using already accelerator paving the way for future initiatives to automate the creation and ongoing management of benefit plans.

John Cotterell: Now for an update on our people and innovation.

Speaker Change: Now for an update on our people and innovation.

Speaker Change: Recent innovation lab global final held in Belgrade, and March, but altogether top talent from around the world.

Speaker Change: Okay, AI driven solutions addressing real client challenges.

John Cotterell: Our recent Innovation Lab Global Final, held in Belgrade in March, brought together top Endava talent from around the world to showcase AI-driven solutions addressing real client challenges. Out of the many impressive entries, eight finalist teams competed. With Australia taking first place for an edge AI solution transforming healthcare Germany secured second for bridging A.I. with diverse systems and North Macedonia and third for boosting digital accessibility through A.I. and open source. Argentina's team won the crowd sought with an AI powered payment automation solution.

Speaker Change: Out of the many impressive entries eight finalists teams competed.

Speaker Change: With Australia, taking first place for an edge AI solution transforming health care.

Speaker Change: Germany secured second leveraging AI with Douglas systems, and North Macedonia, and third the boosting digital accessibility through AI and open source tools Arjun.

Speaker Change: Argentina's team won the crowd salt with NII pilot payment automation solution.

Speaker Change: Congratulations to all participants your innovation continues strive indaba sport.

John Cotterell: Congratulations to all participants. Your innovation continues to drive Endava forward.

John Cotterell: As of quarter end, we were 11,365 in Darwin strong, representing a 3.1% increase from the same period last year. We continue to prioritize recruitment in high demand areas, including data, AI and cloud to match the evolving needs of our clients. To all Endavans, thank you for your commitment and determination. As we navigate the digital shift and discover the new opportunities that it brings. We remain focused on building sustainable growth, preserving our strong culture, and delivering solutions that help our clients not just adapt, but lead.

Mark Thurston: As of quarter end, we were 11,365 Endavans strong, representing a 3.1% increase from the same period last year. We continue to prioritize recruitment in high-demand areas, including data, AI, and cloud, to match the evolving needs of our clients. To all Endavans, thank you for your commitment and determination as we navigate the digital shift and discover the new opportunities that it brings. We remain focused on building sustainable growth, preserving our strong culture, and delivering solutions that help our clients not just adapt but lead. With that, I'll hand over to Mark for a closer look at our quarterly financial results and guidance for the upcoming quarter and remainder of the fiscal year. Thanks, John. Endava's revenue totaled GBP 194.8 million for the 3 months ended 31 March 2025, compared to GBP 174.4 million in the same period in the prior year, representing an 11.7% increase.

Speaker Change: As of course, and we were 11365 adult and strong.

Speaker Change: Presenting a three 1% increase from the same period last year.

Speaker Change: We continue to prioritize recruitment in high demand areas, including data AI and Klaus.

Speaker Change: Match, the evolving needs of our clients.

Speaker Change: So all the dominance. Thank you for your commitment and determination as we navigate the digital shift discover the new opportunities that it brings we remain focused on building sustainable growth preserving our strong culture and delivering solutions that help our clients not just at <unk>.

Speaker Change: But late.

Speaker Change: With that I'll hand over to Mark for a closer look at our quarterly financial results and guidance for the upcoming quarter and remainder of the fiscal year.

Mark Thurston: With that, I'll hand over to Mark for a closer look at our quarterly financial results and guidance for the upcoming quarter and remainder of the fiscal year. Thanks, John. Endava's revenue totaled £194.8 million for the three months ended March 31st, 2025, compared to £174.4 million in the same period in the prior year, representing an 11.7% increase. In constant currency, our revenue increased 12.4% from the same period in the prior year.

Mark: Thanks, Joe.

Mark: And Tavis revenue totaled $194 8 million pounds for the three months ended March 31, 2025, compared to $174 4 million pounds in the same period in the prior year.

<unk> 11, 7% increase in <unk>.

Mark Thurston: In constant currency, our revenue increased 12.4% from the same period in the prior year. The lower revenue versus our guide is explained by the weakening of the dollar at the end of the quarter and some deals we expected to get signed in North America that didn't and to a lesser extent in Asia Pacific, whilst the UK and Europe performed as expected. Profit before tax for the 3 months ended 31 March 2025 was GBP 13.6 million compared to a loss of GBP 0.5 million in the same period in the prior year. Our adjusted PBT for the 3 months ended 31 March 2025 was GBP 24.6 million compared to GBP 15.5 million for the same period in the prior year. Our adjusted PBT margin was 12.6% for 3 months ended 31 March 2025 compared to 8.9% for the same period in the prior year.

Mark: Constant currency revenue increased 12, 4% from the same period in the prior year.

Mark Thurston: The lower revenue versus our guide is explained by the weakening of the dollar at the end of the quarter, and some deals we expected to get signed in North America that didn't, and to a lesser extent in Asia Pacific, whilst the UK and Europe performed as expected. Profit before tax for the three months ended March 31st 2025 was £13.6 million, compared to a loss of £0.5 million in the same period in the prior year. Our adjusted PBT for the three months ended March 31st, 2025 was £24.6 million, compared to £15.5 million for the same period in the prior year.

Mark: The lower revenue versus our guide is explained by the weakening of the dollar at the end of the quarter and some deals we expected to get signed in North America didn't and to a lesser extent in Asia Pacific, whilst the U K and Europe formed as expected.

Mark: Profit before tax for the three months ended March 31, 2025 was $13 6 million pounds compared to a loss of 0.5 million pounds in the same period in the prior year.

Mark: Adjusted PBT for the three months ended March 31st 2025 was $24 6 million pounds compared to $15 5 million pounds for the same period in the prior year.

Mark Thurston: Our adjusted PBT margin was 12.6% for three months ended March 31st, 2025, compared to 8.9% for the same period in the prior year. Our adjusted diluted earnings per share was 34 pence for three months ended March 31st, 2025, calculated on 59.4 million diluted shares as it compared to 22 pence for the same period in the prior year, calculated on 58.8 million diluted shares. Our adjusted diluted earnings per share in Q3 was stronger than our guide for the quarter of 31 to 32 pence.

Mark: Our adjusted PBT margin was 12, 6% for three months ended March 31, 2025, compared to eight 9% same period in the prior year.

Mark Thurston: Our adjusted diluted earnings per share was GBP 0.34 for 3 months ended 31 March 2025, calculated on 59.4 million diluted shares as it compared to GBP 0.22 for the same period in the prior year, calculated on 58.8 million diluted shares. Our adjusted diluted earnings per share in Q3 were stronger than our guide for the quarter of GBP 0.31 to GBP 0.32. We were able to offset the revenue miss with a strong cost control of adjusted SG&A. Additionally, the share buyback started last quarter had a minimal impact on adjusted EPS in the quarter. Revenue from our 10 largest clients accounted for 39% of revenue for the 3 months ended 31 March 2025, compared to 34% for the same period last fiscal year.

Mark: Our adjusted diluted earnings per share was 34 pence for three months ended March 31, 2025 calculated on $59 4 million diluted shares as compared to 22 pence for the same period in the prior year calculated on $58 8 million diluted shares.

Mark: Alright, just a diluted earnings per share in Q3, the strongest in our guide for the quarter of 31 to 32 pence.

Mark Thurston: We were able to offset the revenue miss with a strong cost control of adjusted SG&A. Additionally, the share buyback started last quarter had a minimal impact on adjusted EPS in the quarter. Revenue from our 10 largest clients accounted for 39% of revenue for the three months ended March 31st, 2025, compared to 34% for the same period last fiscal year. The average spend per client from our 10 largest clients increased from £5.9 million to £7.5 million for the three months ended March 31st, 2025, as compared to the three months ended March 31st, 2024, representing a 28% year over year increase.

Mark: We were able to offset the revenue Miss with a strong cost control of adjusted SG&A.

Mark: Additionally, the share buyback started last quarter had a minimal impact on adjusted EPS in the quarter.

Mark: Revenue from our 10 largest clients accounted for 39% of revenue for the three months ended March 31st 2025 compared to 34% for the same period last fiscal year.

Mark Thurston: The average spend per client from our 10 largest clients increased from GBP 5.9 million to GBP 7.5 million for the three months ended 31 March 2025, as compared to the three months ended 31 March 2024, representing a 28% year-over-year increase. In the three months ended 31 March 2025, North America accounted for 37% of revenue, Europe for 22%, the UK for 35%, while the rest of the world accounted for 6%. Revenue from North America grew 37.1% for the three months ended 31 March 2025, over the same period last fiscal year, due mainly to the contribution of GalaxE. Comparing the same periods, revenue from Europe declined 10.4%, the UK grew 13.2%, and the rest of the world declined 16.0%.

Mark: The average spend per client from our 10 largest clients increased from $5 9 million pounds to $7 5 million pounds for the three months ended March 31st 2025 as compared to the three months ended March 31st 2024, representing a 28% year over year increase.

Mark Thurston: In the three months ended March 31st 2025, North America accounted for 37% of revenue, Europe for 22%, the UK for 35%. while the rest of the world accounted for 6%. Revenue from North America grew 37.1% for the three months ended March 31, 2025, over the same period last fiscal year, due mainly to the contribution of Gallup.

Mark: And the same months ended March 31, 2025, North America accounted for 37% of revenue Europe for 22%. The UK is that a 5% while the rest of world accounted for 6%.

Mark: Revenue from North America grew 77, 1% for the three months ended March 31, 2025 over the same period last fiscal year June mainly to the contribution of Galaxy.

Mark Thurston: Comparing the same periods, revenue from Europe declined 10.4%, the UK grew 13.2%, and the rest of the world declined 16.0%. Adjusted free cash flow was £17.5 million for three months ended March 31st, 2025, compared to £2.2 million during the same period last fiscal year. Our cash and cash equivalents at the end of the period totaled £68.3 million at March 31st, 2025, compared to £62.4 million at June 30th, 2024. Our borrowings totaled £136.5 million at March 31st, 2025, compared to £144.8 million at June 30th, 2024. Capital expenditure for the three months ended March 31st, 25 as a percentage of revenue was 0.6% compared to 0.8% in the same period last fiscal year.

Mark: Comparing the same periods revenue from Europe declined 10, 4% U K grew 13, 2% and the rest of the world declined 16.0%.

Mark Thurston: Adjusted free cash flow was £17.5 million for the three months ended 31 March 2025, compared to £2.2 million during the same period last fiscal year. Our cash and cash equivalents at the end of the period totaled £68.3 million at 31 March 2025, compared to £62.4 million at 30 June 2024. Our borrowings totaled £136.5 million at 31 March 2025, compared to £144.8 million at 30 June 2024. Capital expenditure for the three months ended 31 March 2025, as a percentage of revenue was 0.6% compared to 0.8% in the same period last fiscal year. As an update on our share repurchase program, Endava has repurchased approximately 2 million ADSs for $39.7 million as of 30 April 2025. As of 30 April 2025, $60.3 million remained for additional repurchases under the authorization.

Mark: Adjusted free cash flow was $17 5 million pounds. The three months ended March 31, 2025, compared to $2 2 million pounds. During the same period last fiscal year.

Mark: Our cash and cash equivalents at the end of the period totaled $68 3 million pounds at March 31, 2025, compared to $62 4 million pounds at June 30 of 2024.

Mark: Our borrowings totaled $136 5 million pounds March 31st 2025, compared to $144 8 million pounds of June 2020 full.

Mark: Capital expenditure for the three months ended March 31, 25, as a percentage of revenue with 0.6% compared to 0.8% in the same period last fiscal year.

Mark Thurston: As an update on our share repurchase program, Endava has repurchased approximately 2 million ADSs for $39.7 million as of April 30, 2025. As of April 30th, 2025, $60.3 million remain for additional repurchases under the authorization.

Mark: As an update on our share repurchase program.

Mark: Delta has repurchased approximately 2 million eight assets for $39 $7 million as of April 32025.

Mark: April 30 of 2025 $63 million remain for additional repurchases under the authorization.

Mark Thurston: Additionally, as John mentioned earlier, the Board of Directors of Endava has approved an additional $50 million of repurchases under the existing share repurchase program.

Mark Thurston: Additionally, as John mentioned earlier, the board of directors of Endava has approved an additional GBP 50 million of repurchases under the existing share repurchase program. Before providing the guide, I'd like to provide some additional details. The US dollar has continued to weaken since we closed Q3. This is providing additional significant headwinds. On a sequential basis, in Q4, it is contributing a -3% impact on growth. In addition, in North America, the conversion of deals in the opportunity pipeline into revenue continues to slow, reflecting a high level of client caution on spend, particularly in mobility and healthcare. Additionally, the rest of the world has slowed more than expected when we last guided. The UK also continues to face headwinds while Europe is performing as expected. Now moving on to our outlook. Our guidance for Q4 fiscal year 2025 is as follows.

John: Additionally, as John mentioned earlier, the board of directors of Indaba has.

John: Has approved an additional $60 million of repurchases under the existing share repurchase program.

Mark Thurston: Before providing the guide, I'd like to provide some additional details. The US dollar has continued to weaken since we closed Q3, and this is providing additional significant headwinds. On a sequential basis, in Q4, it is contributing a negative 3% impact on growth. In addition, in North America, the conversion of deals in the opportunity pipeline into revenue continues to slow, reflecting a high level of client caution on spend, particularly in mobility and healthcare. Additionally, the rest of the world has slowed more than expected when we last guided. The UK also continues to face headwinds while Europe is performing as expected.

Speaker Change: Before providing the guide I'd like to provide some additional details.

Speaker Change: The U S. Dollar has continued to weaken since we closed Q3 and this is providing additional significant headwinds.

Speaker Change: On a sequential basis in Q4, it is contributing a negative 3% impact on gross.

Speaker Change: In addition in North America, the conversion of deals in the opportunity pipeline into revenue continues to slow reflecting a high level of client caution on spend particularly in mobility in health care.

Speaker Change: Additionally, the rest of world has slowed more than expected when we last guided you.

Speaker Change: The UK also continues to face headwinds, while Europe is performing as expected.

Speaker Change: Now moving onto our outlook.

Speaker Change: Our guidance for Q4 fiscal year 2025 is as follows.

Mark Thurston: Endava expects revenue to be in the range of £186 million to £188 million, representing constant currency revenue change of between -1.0% and 0% on a year-over-year basis. Endava expects adjusted diluted EPS to be in the range of GBP 0.22 to 0.24 per share. Our guidance for the full year fiscal year 2025 is as follows. Endava expects revenue to be in the range of £771.5 million to £773.5 million, representing constant currency revenue increase of between 6.0% and 6.5% on a year-over-year basis. Endava expects adjusted diluted EPS to be in the range of GBP 1.11 to 1.13 per share. This above guidance for Q4 fiscal year 2025 and the full year fiscal 2025 assumes the exchange rates on 30 April 2025, when the exchange rate was GBP 1 to $1.34 and EUR 1.18. This concludes our prepared comments.

Mark Thurston: Now moving on to our outlook. Our guidance for Q4 fiscal year 2025 is as follows. Endava expects revenue to be in the range of £186m to £188m, representing constant currency and revenue change of between minus 1.0% and 0% on a year-over-year basis. Endava expects adjusted diluted EPS to be in the range of 22 to 24 pence per share.

Speaker Change: <unk> expects revenue to be in the range of 186 million pounds to 188 million pounds, representing constant currency revenue change of between minus 1.0% and zero percent on a year over year basis.

Speaker Change: <unk> expects adjusted diluted EPS to be in the range of 22 to 24 pence per share.

Mark Thurston: Our guidance for the full year fiscal year 2025 is as follows. Endava expects revenue to be in the range of £771.5 million to £773.5 million, representing constant currency revenue increase of between 6.0% and 6.5% on a year-over-year basis. Endava expects adjusted diluted EPS to be in the range of £111 to £113 per share. If this above guidance for Q4 fiscal year 2025 and the full year fiscal 2025 assumes the exchange rates on the April 30th, 2025, when the exchange rate was one British pound to 1.34 US dollars and 1.18 euro.

Speaker Change: Our guidance for the full year fiscal year 2025 is as follows.

Speaker Change: <unk> expects revenue to be in the range of 771 5 million pounds to 773 5 million pounds, representing constant currency revenue increase of between 6.0% and six 5% on a year over year basis.

Speaker Change: <unk> expense adjusted diluted EPS to be in the range of 111 to 113 pence per share.

Speaker Change: This above guidance for Q4 fiscal year 2025, and our full year fiscal 2025 assumes that exchange rates on the April 30 of 2025, when the exchange rate was one British pound to $1 three four U S dollars.

Speaker Change: 180.

Unknown Executive: This concludes our prepared comments.

Speaker Change: This concludes our prepared comments operator, we are now ready to open the line for Q&A.

Unknown Executive: Operator, we are now ready to open the line for Q&A. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two.

Laurence Madsen: The first question comes from Bryan Bergin with TD Cowen. Please go ahead. Hi guys. Thank you for taking the question here.

We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad. If you are using a speakerphone. Please pick up your handset before pressing the keys. If at any time. Your question has been addressed and you would like to with <unk>.

Speaker Change: <unk>. Your question. Please press Star then two.

Unknown Executive: At this time, we will pause momentarily to assemble our roster.

Speaker Change: At this time, we will pause momentarily to assemble our roster.

Bryan Bergin: The first question comes from Bryan Bergin with T.D.

Speaker Change: The first question comes from Bryan Bergin with TD Cowen. Please go ahead.

Bryan Bergin: Hi, guys. Thank you for taking the question here so.

Bryan Bergin: John, I wanted to dig into some of the challenges here and wanted your perspective on whether any changes internally over the last couple of years, whether the acquisition of GalaxE or anything like that, has potentially compounded issues around execution while client demand has been more challenged. As we kind of step back and see some peers talking about more stability, what do you see as the biggest differences here? Hi Bryan. Thanks for that. I think the biggest focus that we have is on getting some of these big deals that we have in our pipeline signed and over the line. They're big swing items for us. We expected, as we guided last time, that we would close around 10 of these big deals, and actually 5 of them closed. There were a number of factors.

Bryan Bergin: So John I wanted to dig into some of the challenges here and one of your perspective on whether any changes internally over the last couple of years, whether the acquisition of galaxy or anything like that has essentially compounded issues around execution, while client demand has been more challenged so as we kind of step back and see some peers talking about.

Bryan Bergin: More stability, what do you see as the biggest differences here.

Bryan Bergin: Cowan, please go ahead. Hi, Bryan. Thanks for that. think the biggest focus that we have is on getting some of these big deals that we have in our pipeline signed and over the line. And, you know, they're big swing items for us, we expect to um as we guided last time that we would close um around 10 of these big deals and actually five of them closed There were a number of factors. Two actually announced fairly quickly after our earnings call that they were in take private discussions and that refocused them and they deferred doing those deals as they went through that take private.

John: Hi, Brian Thanks for that.

John: I think the biggest.

John: Our focus.

John: It was on getting some of these big deals that we have in our pipeline.

John: Signed over the line.

John: And.

John: The big swing items for us we expect.

John: As we guided last time that we would close.

John: Around 10 of these big deals and actually five of them closed.

John: Yeah.

John: There were a number of factors to actually announced.

John Cotterell: Two actually announced fairly quickly after our earnings call that they were in take private discussions, and that refocused them, and they deferred doing those deals as they went through that take private. One announced a big cost takeout program and also deferred. There were two tariff-related ones where they were in the automotive space, and they had a big focus on looking at their supply chain, which obviously they prioritized above what they were looking at with us. None of those have gone away, but they have all been pushed back as a result of those external challenges coming in. Now, you're asking whether the internal changes have actually compounded things. We're not seeing that. We actually see the internal changes that we've made over the last two years have strengthened our conversations with clients. We're talking alongside the larger scale deals that we're working on.

John: Fairly quickly after our earnings call.

John: Take private discussions.

John: And that where you're focused.

John: <unk>.

John: Doing those deals as they went through that take privates.

Bryan Bergin: One announced a big cost takeout program and also deferred. And then there were two tariff related ones where they were in the automotive space and they had a big focus on looking at their supply chain, which obviously they prioritized above what they were looking at with us. None of those have gone away, but they have all been pushed back as a result of those external challenges coming in.

John: One announced the big cost takeout program.

John: So deferred.

John: And then there were two tariff related ones where.

John: We were in the automotive space.

John: And they had a big focus on looking at the supply chain, which obviously they prioritized.

John: Above what they were looking at with US none of those have gone away, but they have all been pushed back.

John: As a result of external challenges coming in.

John Cotterell: Now, you're asking whether the internal changes have actually compounded things. We're not seeing that. We actually see the internal changes that we've made over the last two years. and have strengthened our conversations with clients. We're talking, you know, alongside the larger scale deals that we're working on. We're talking at more senior levels, a much more imaginative types of work that we're working on. And those are directly resulting from the internal changes that we made both in the technologies that we're bringing to bear, the ways in which we are structuring deals, but most importantly, in the go to market and the conversations that we're having with clients.

John: Now you're asking whether.

John: The internal changes have actually compounded things, we're not saying that we actually see the internal changes that we've made over the last two years.

John: Hum strengthened.

John: Conversations with clients we're talking.

John: Alongside the larger scale deals that we're working on.

John Cotterell: We're talking at more senior levels, a much more imaginative types of work that we're working on. Those are directly resulting from the internal changes that we made, both in the technologies that we're bringing to bear, the ways in which we are structuring deals, but most importantly, in the go-to-market and the conversations that we're having with clients. We do feel we're in a little bit of an air pocket at the moment as we're shifting from the digital transformation work that we were doing and going through into this AI-driven digital shift and the types of deals that go with that shifting with it. We believe that we're positioning ourselves well. We can see those deals building in the pipeline. We now have 24 of those larger deals compared to 21 last time. 9 new ones. We won 5. We lost 1.

We're talking at more senior levels.

John: I'm much more imaginative.

John: Types of work that we're working on.

And those are directly resulting from the internal changes that we made.

Speaker Change: Are you, saying.

The technologies that we're bringing to bear the.

Speaker Change: Ways in which we are structuring deals.

Speaker Change: But most importantly in the go to market and the conversations that we're having with clients.

John Cotterell: So, you know, we do feel we're in a little bit of an air pocket at the moment, as we're shifting from, you know, the digital transformation work that we were doing, and going through into this AI driven digital shift, and the types of deals that go with that shifting with it. and that we we believe that we're positioning ourselves well. We can see those deals building in the pipeline. We now have 24 of those larger deals compared to 21 last time. and nine new ones. We won five, we lost one. Actually, it wasn't lost. It was just put on a very long pause.

No.

Speaker Change: We do feel we're in a little bit of an air pocket at the moment.

Speaker Change: Shifting from.

The digital transformation work that we would that.

Speaker Change: We were doing.

Speaker Change: And going through into this AI driven digital shift.

Speaker Change: Types of deals that go with that shifting with it.

Speaker Change: And but.

Speaker Change: We believe we are positioning ourselves well, we can see those deals.

Speaker Change: Building in the pipeline, we now have 24 of those larger deals compared to 21 last time.

Speaker Change: Nine new ones, we won five we lost one.

Speaker Change: Im.

John Cotterell: Actually, it wasn't lost. It was just put on a very long pause. That took us up from 21 last time to 24. We continue to see that build, and our focus is on getting those conversions through so that we can get it into revenue and start seeing an uptick in the revenue. Okay. All right. That's very helpful detail. Thank you for that. I guess as you step back and navigate this more challenging operating backdrop, how do you think about the workforce? Do you need to have additional optimization? From a forecasting standpoint too, does it require a change in the approach just given the volatility and client behavior? I'll pick up on the workforce. I'll let Mark talk about the forecasting guidance.

Speaker Change: Actually it wasn't lost it was just put on a very long pools.

John Cotterell: So, you know, that took us up from 21 last time to 24. So we continue to see that build. And our focus is on getting those conversions through so that we can get it into revenue and start seeing an uptick in the revenue.

Speaker Change: So that took us up from 21 last time to 24. So we continue to see that build and our focus is on getting nice conversions through so that we can.

Speaker Change: Get it into revenue and start seeing an uptick in the revenue.

Bryan Bergin: Okay, that's very helpful detail. Thank you for that.

Speaker Change: Okay, Alright, that's very helpful detail. Thank you for that and I guess as you step back in and navigate this more challenging operating backdrop, how do you think about it.

Tyler Dupont: And I guess as you step back and navigate this more challenging operating backdrops, how do you think about, you know, the workforce, do you need to have additional optimization?

Speaker Change: The workforce you would need to have additional optimization and then from a forecasting standpoint, two does it does it require a change in the approach just given the volatility in client behavior.

John Cotterell: And then from a forecasting standpoint, too, does it does it require a change in the approach, just given the volatility and client behavior? I'll pick up on the workforce.

I'll pick up on the workforce.

John Cotterell: I'll let Mark talk about the forecasting guidance. On the workforce side, there is quite a big shift going on in the types of skills and types of work that we're doing. On one extreme, things like testing are dropping quite sharply, a lot of AI automation coming into that, needing less people to do the same uptick coming in AI data cloud in particular, and a lot of reskilling and a lot of the new people that are coming into the organization around those skills. And So that is also driving our attrition up a little bit at the moment as we make that shift from the older style skills that we had to the newer style.

Speaker Change: Talk about the forecasting guidance.

John Cotterell: On the workforce side, there is quite a big shift going on in the types of skills and types of work that we are doing. On one extreme, things like testing are dropping quite sharply. A lot of AI automation coming into that, needing less people to do the same amount of work. On the other side, a big uptick coming in AI data and cloud in particular, and a lot of reskilling and a lot of the new people that are coming into the organization around those skills. That is also driving our attrition up a little bit at the moment as we make that shift from the older style skills that we had to the newer style. A big shift going on there. It is one we are driving through. We are not finding that we are short of people or unable to staff businesses coming through.

Speaker Change: On the work we'll start there is quite a big shift going on in the types of skills and types of work that we're doing.

Speaker Change: One extreme things like testing dropped.

Speaker Change: Dropping quite sharply a lot of AI automation coming in until that needing less people.

Speaker Change: To do the same amount of work.

On the other side.

Speaker Change: Great.

Speaker Change: Uptake coming in in AI data cloud in particular.

Speaker Change: And a lot of re skilling and a lot of the new people coming into the organization.

Speaker Change: Around those skills.

Speaker Change: And.

Speaker Change: So that is also driving our attrition up a little bit at the moment as we as we make that shift from.

Speaker Change: The oldest style skills that we have the newest style.

John Cotterell: So a big shift going on there. It is one we're driving through. We're not finding that we're shorter people or unable to staff businesses coming through. So we feel confident we're making that shift well.

Speaker Change: So a big shift going on there is one we are driving through we're not finding that.

Speaker Change: We're sure that people are unable to staff business that's coming through.

Mark Thurston: We feel confident we're making that shift well. Mark, do you want to talk about the forecast? Yeah. A significant thing has been USD GBP rates. I mean, since we guided mid-February, which was USD 1.24, we're guiding at 1.34. That's an 8% shift. We haven't really seen anything like this since Brexit. That has taken off, certainly for Q4, about sort of GBP 7 million of the previous guide alone. It's quite a significant shift from an FX perspective. In terms of the big deals and in terms of the sort of guide, we have stripped them out because it is very difficult to predict timing. That is another big sort of shift. In terms of the guide that we have for Q4, there is a very limited amount of pipeline in it.

Speaker Change: So we feel confidently, making that shift well Mark do you want to talk about with forecast yeah.

Mark Thurston: Mark, do you want to talk about the forecast? Yeah. A significant thing has been dollar GBP rates. I mean, since we guided mid-February, which was US dollar 124, we're guiding at 134. That's an 8% shift. We haven't really seen anything like this since Brexit. And that has taken off, certainly for Q4, about sort of 7 million of the previous guide alone. So it's quite a significant shift from an FX perspective. In terms of the big deals and in terms of the sort of guide, we have stripped them out because it is very difficult to predict timing.

I'd say, that's one thing that's been a dollar GBP right I mean since we got it mid February.

Speaker Change: U S. Dollar 124 got a 134, that's an 8% shift we haven't really seen anything like this since Brexit.

Speaker Change: And that has taken off setting for Q4 that sort of $7 million at the previous God alone.

So it's quite a significant shift from an FX perspective.

Speaker Change: In terms of the big deals.

Speaker Change: And in terms of the sort of guide we have stripped them out because it's very difficult to predict timing.

Mark Thurston: That is another big sort of shift. So in terms of the guide that we have for Q4, there is very limited amount of pipeline in it. Certainly at the top of the guide, there's something like 1% or so of the figure. And at the bottom, there's no basic pipeline in there. So we've taken what we believe is a very conservative view, given the ability to predict when these bigger deals are going to land is proving extremely difficult. And I think also the other thing is there is still quite a bit of uncertainty, certainly in the US, where we have seen things slow.

Speaker Change: Now the big sort of shifts in terms of the guide that we have for Q4.

Speaker Change: There is very limited amount of.

Speaker Change: And it.

Mark Thurston: Certainly, at the top of the guide, there's something like 1% or so of the figure. At the bottom of the guide, there is no basic pipeline in there. We've taken what we believe is a very conservative view given that the ability to predict when these bigger deals are going to land is proving extremely difficult. I think also the other thing is there is still quite a bit of uncertainty. Certainly, in the US where we have seen things slow, it's difficult to pinpoint whether it is things such as we talk around tariffs, but we've certainly seen automotive sort of pull back and some of our logistics clients as well pull back. We've been conservative with the outlook, and we will remain conservative, I think, as we go forward. Okay. Appreciate that. Thank you. Bryan.

Speaker Change: Certainly at the top of the guide that somewhat central side of the figure on the.

Speaker Change: Bottom of the guide.

Speaker Change: Basic.

Speaker Change: And.

Speaker Change: So we've taken what we believe is a very.

Speaker Change: Conservative view, given the ability to predict when these bigger deals are going to land.

Speaker Change: Is proving extremely difficult.

Speaker Change: And I think also the other thing is there is still quite a bit of uncertainty.

Speaker Change: In the U S. What we have seen things slow.

Tyler Dupont: It's difficult to pinpoint whether it is things such as talk around tariffs, but we've certainly seen automotive sort of pull back and some of our logistics clients as well pull back. So we've been conservative with the outlook. And we will remain conservative, I think, as we go forward. Okay, appreciate that. Thank you.

Speaker Change: It's difficult to pinpoint whether these things.

Speaker Change: The turnaround times that we've certainly seen automotive sort of pull backs in Slovak logistics clients as well pull back.

Speaker Change: So we've been conservative with the outlook.

We will remain conservative I think as we go forward.

Speaker Change: Okay I appreciate that thank you.

Tyler Dupont: The next question comes from Tyler DuPont with Bank of America. Please go ahead. Hi, good morning, John and Mark. Thanks for taking our questions. I just want to start by asking if you can discuss some of the pricing conversations you're currently having, you know, given the macro environment has remained, let's call it choppy. It seems like, you know, certain vendors and peers are seeing wealth of stability, others, you know, competing a little bit more aggressively for work.

Speaker Change: Uh huh.

Laurence Madsen: The next question comes from Tyler DuPont with Bank of America. Please go ahead. Hi. Good morning, John and Mark. Thanks for taking our questions. I just want to start by asking if you can discuss some of the pricing conversations you're currently having given the macro environment has remained, let's call it, choppy. It seems like certain vendors and your peers are seeing relative stability, others competing a little bit more aggressively for work. When you're having conversations with your clients, are they discussing it all about any pricing dynamics worth mentioning, any concessions or anything like that that Endava has been engaging with to try to secure wins or maintaining the deals that they have? It's always competitive. It's got more competitive is what I'd say. I think in terms of measured on an average basis, we are holding our day rates, basically.

Tyler Dupont: The next question comes from Tyler Dupont Dupont with Bank of America. Please go ahead.

Tyler Dupont: Hi, Good morning, John and Mark Thanks for taking my questions.

Tyler Dupont: Wanted to start by asking if you can discuss some of the pricing conversations you're currently having.

Tyler Dupont: The macro environment has remained.

Tyler Dupont: Choppy it seems like you know certain vendors and your peers are seeing relative stability, others, competing a little bit more aggressively for work.

John Cotterell: You know, when you're having conversations with your clients, are they discussing at all about any pricing dynamics worth mentioning, any confessions or anything like that that Endava has been engaging with to try to secure wins or maintaining the deals that they have? It's always competitive. It's got more competitive is what I'd say. I think in terms of measure on average basis, we are holding our day rates basically. We obviously cut deals to win them. They tend to be at a larger level. So some of the bigger deals where to make it a more compelling proposition to the client, we will come to a construct that works for both of us.

Tyler Dupont: When you're having conversations with your clients are they discussing at all about any pricing dynamics worth worth mentioning any concessions or anything like that that and <unk> has been engaging with to try to secure.

Tyler Dupont: Secure wins or maintaining the deals don't happen.

Tyler Dupont: It's it's always competitive its got more competitive is what I'm, saying I think in terms of.

John Cotterell: So pricing is competitive. But when you look at it on the average, certainly between Q2 and Q3, it is on an average, you know, revenue paired or an average workday rate, it is fairly stable. And that remains the case in terms of the Q4 guide. We have heard, you know, that people are pitching very aggressively for work. But we seem to be profitable in the work that we secure.

Tyler Dupont: Great, that's helpful.

Tyler Dupont: Measured on an average basis.

Tyler Dupont: Our holding all day rates basically we obviously cut deals.

John Cotterell: We obviously cut deals to win them. They tend to be at a larger level. Some of the bigger deals where to make it a more compelling proposition to the client, we will come to a construct that works for both of us. Pricing is competitive. When you look at it on the average, just certainly between Q2 and Q3, which is on an average revenue pad or an average workday rate, it is fairly stable. That remains the case in terms of the Q4 guide. We have heard that people are pitching very aggressively for work, but we seem to be profitable in the work that we secure. Great. That's helpful. Then I wanted to just touch on growth by geography. For starters, maybe I missed it. What was the organic growth in North America?

Tyler Dupont: And then they tend to be larger.

Tyler Dupont: Level some of the bigger deals flat.

Tyler Dupont: To make it a more compelling proposition to the client we will.

Tyler Dupont: <unk> come to a construct that works for both of US So pricing is competitive but when you look at it on the average to something between Q2 and Q3 eight wishes on an average revenue pad or an operating day rate it is fairly stable.

Tyler Dupont: And that remains the case in terms of the Q4 guide.

Tyler Dupont: Uh huh.

Tyler Dupont: People are pushing very aggressively for work.

Tyler Dupont: But we seem to be profitable.

Tyler Dupont: Sure.

Tyler Dupont: And then I want to just touch on growth by geography. For starters, maybe I missed it. What was the organic growth in North America? And then you mentioned, you know, you've seen Continued softness in North America and in Europe it seems like things are trending. As expected, UK facing some incremental headwinds.

Tyler Dupont: Great.

Tyler Dupont: Helpful.

Speaker Change: And then I wanted to just touch on growth by geography for starters, maybe I missed it what was the organic growth in North America, and then you mentioned you've seen.

Mark Thurston: You mentioned you've seen continued softness in North America. In Europe, it seems like things are trending as expected, UK facing some incremental headwinds. Just want to gain a little bit of clarity on the types of projects that you are seeing relative stability in versus those that are beginning to see incremental pressure. Just any sizing of that would be appreciated. North America has proved challenging. In terms of sort of like Q3 year-on-year, it is not a great comparison, basically, because you have the full-year impact of GalaxE this year compared to last year. Certainly, sequentially, exchange rates are relatively stable. Where we get the big movement is when you look at it going from Q3 to Q4. We were anticipating in the previous guide a reasonable sequential sort of step-up. We are no longer seeing that.

Speaker Change: Continued softness in North America and in Europe. It seems like things are trending.

Speaker Change: As expected U K facing some incremental headwinds just wanted to gain a little bit of clarity on the types of projects that you're seeing relative stability in versus those that are beginning to see incremental pressure and I'm just any sizing of that would be would be appreciated.

John Cotterell: Just want to gain a little bit of clarity on the types of projects that you're seeing relative stability in versus those that are beginning to see incremental pressure, and just any sizing of that would be appreciated. So North America has proved challenging in terms of Q3 year on year. It's not a great comparison, basically, because you have the four-year impact of Galaxy this year compared to last year. Certainly, sequentially, exchange rates are relatively stable. Where we get the big movement is when you look at it going from Q3 to Q4. So we were anticipating, in the previous guide, a reasonable sequential sort of step-up.

Speaker Change: So North America has proved challenging tend to sort of like G suite at year on year.

Speaker Change: A great comparison basis because.

Speaker Change: As you have.

Speaker Change: For the full year impact of got into this year compared to last year.

Suddenly.

Speaker Change: Sequentially the exchange rates are relatively stable, while we get.

Speaker Change: The Big movement is when you look at it going from Q3 into Q4, So we were anticipating.

Speaker Change: The previous Guy a reasonable sequential sort of stack up.

John Cotterell: We're no longer seeing that. It doesn't mean that North America is going backwards very strongly on a reported basis. It will probably be slightly below the level at which it is at the moment, but it would have grown a lot stronger if not for those FX headwinds, which is something like nearly £5-6 million. So, the headwinds that we're experiencing in North America in particular, most of it is FX driven, but there's certainly been, you know, a slowdown in terms of some of the bigger deal, you know, conversion that we're anticipating, as John alluded to, and more generally also, it's been patchy in particular industry verticals like, you know, automotive, which resides within our mobility segment, And just on the types of projects.

Speaker Change: We're no longer.

Speaker Change: Seeing box it doesn't mean that North America is guy.

Mark Thurston: It doesn't mean that North America is going backwards very sort of strongly. On a reported basis, it will probably be slightly below the level at which it is at the moment, but it would have grown a lot stronger if not for those FX headwinds, which are something like nearly, I think, about sort of GBP 5 million, GBP 6 million. The headwinds that we're experiencing in North America in particular, most of it is FX-driven, but there's certainly been a slowdown in terms of some of the bigger deal conversion that we're anticipating, as John alluded to. More generally also, it's been patchy in particular industry verticals like automotive, which resides within our mobility segment. Just on the types of projects, so the growth areas are the AI data cloud-based areas of where we're seeing the greatest demand, the greatest quick demand, if you like.

Speaker Change: It's very strongly.

Speaker Change: Two basis it will be.

Speaker Change: Slightly below the level at which it is but it would have grown a lot stronger if not for those FX headwinds, which is something like nearly I think about sort of $5 6 million pounds. So the headwinds that we're experiencing in North America in particular, most of it is FX driven but they're certainly being.

Speaker Change: A slowdown in some of the biggest deal conversion.

Speaker Change: Dissipating as John alluded to.

Speaker Change: More generally all sites trained patchy in particular industry verticals like.

Speaker Change: Automotive, which resides within our mobility segment.

John Cotterell: So the growth areas are the AI, data, cloud-based areas are where we're seeing the greatest demand. Great quick demand, if you like. The pipeline has a lot of core modernization demand. We're closing some of those, but we're not closing them at the rate yet that we would like to see. The areas where we're seeing clients turning things down or it being more competitive is the commodity end. Obviously, we're driving away from the commodity end anyway, in terms of our focus as a business.

Speaker Change: Just on the types of projects.

Speaker Change:

Speaker Change: So the growth areas.

Speaker Change: Hi.

Speaker Change: Right.

Speaker Change: Cloud based.

Speaker Change: Areas of where we're seeing the greatest demand.

Speaker Change: Great as quick demand if you like.

John Cotterell: The pipeline has a lot of core modernization demand. We're closing some of those, we're not closing them at the rate yet that we would like to see. The areas where we're seeing clients turning things down or it being more competitive is the more commodity end. Obviously, we're driving away from the commodity end anyway in terms of our focus as a business. Things like the application maintenance and so on, it's not a huge part of our portfolio, but we are seeing clients going, Is there a way of doing that cheaper? Very helpful. Thanks, Chris. Thanks, Tyler. The next question comes from Harry Read with Redburn Atlantic. Please go ahead. Hi. Thanks for taking questions. Just wanted to ask on headcount. When I try and strip out GalaxE, I've got underlying headcount reducing by around high single digit.

Speaker Change: <unk> has a lot of core modernization.

Speaker Change: We are closing some of those but we're not closing the rate.

Speaker Change: Yet that we would like to see.

Tyler Dupont: um but you know things like the um the application maintenance uh and so on uh it's not a huge part of our portfolio um but we are seeing clients going is that is there a way of doing that cheaper Very helpful.

Speaker Change: The areas, where we're seeing.

Speaker Change: Clients, turning things down or is being more competitive is the more commodity end.

Speaker Change: And obviously.

Speaker Change: We're driving away from the commodity end anyway.

Speaker Change: In terms of our focus as a business.

Speaker Change: But things like the <unk>.

Speaker Change: Vacation maintenance.

Speaker Change: And so on.

Speaker Change: Not a huge part of our portfolio.

Speaker Change: But we are seeing clients go ahead is there.

Speaker Change: Why it's doing much deeper.

Unknown Executive: Thanks, Chris. site. Thanks. Thank you.

Speaker Change: Very helpful. Thanks, guys.

Speaker Change: Well go next.

Perry Reed: The next question comes from Perry Reed with Redburn Atlantic. Please go ahead. Hi, thanks for taking questions. I just wanted to ask on headcount. When I try and strip out Galaxy, I've got underlying headcount reducing by around high single digit. I was just curious how much of that is AI efficiency driven? And how much is a reflection of potentially a more muted demand forecast for the next quarter than into FY26? Um, so there is productivity coming through. And that's partly what's helping maintain the pricing that Mark was touching on earlier. There's also a shift Um from the sort of lower value activities that I was talking about earlier, things like testing towards higher value.

Harry Reid: The next question comes from Harry Reid with Redburn Atlantic. Please go ahead.

Harry Reid: Hi, Thanks for taking questions I, just wanted to ask on head count.

Speaker Change: When I try and strip out Galaxy I've got underlying head count reduced by around high single digit.

Harry Read: I was just curious how much of that is AI efficiency-driven and how much is a reflection of potentially a more muted demand forecast for the next quarter and then into FY26? There is productivity coming through, and that's partly what's helping maintain the pricing that Mark was touching on earlier. There's also a shift from the sort of lower value activities that I was talking about earlier, things like testing, towards higher value. By higher value, I mean higher unit rates for things like data, AI, and cloud, and so on. The revenue per head over and above that shift is staying roughly stable. That explains the underlying drop in headcount versus the revenue. Okay. Great. Then maybe more of a housekeeping one. It looks like share-based comp as a percentage of sales has dropped versus the last couple of quarters.

Speaker Change: I was just curious how much of that is efficiency driven and how much is a reflection of potentially a more muted.

Speaker Change: Demand forecast for the next quarter that into FY 'twenty six.

Speaker Change: So there is productivity coming through.

Speaker Change: And that's partly what's helping.

Speaker Change: Maintained.

Speaker Change: Pricing the bulk was touching on earlier.

John Cotterell: And by higher value, I mean higher unit rates. for things like data, AI and cloud and so on. So, you know, the the revenue per head over and above that shift is staying roughly stable. So that explains the underlying drop in headcount versus the revenue.

Speaker Change: There is also a shift.

Speaker Change: From the sort of lower value activities, though I was talking about earlier things like testing.

Speaker Change: Towards high value High Boy Boy high value I mean higher.

Speaker Change: Right.

Speaker Change: So things like data AI and cloud and so on.

Speaker Change: So.

Speaker Change: The <unk>.

Speaker Change: The revenue per head.

Speaker Change: Over and above that shift is staying roughly stable.

Speaker Change: So.

Speaker Change: That's that's that's explains the underlying trough in head count.

Speaker Change: This is the revenue.

Speaker Change: Okay, Great and then maybe more of a housekeeping one it looks like.

Speaker Change: Share based comp as a percentage of sales has dropped.

Speaker Change: Thus the last couple of quarters do you think 3% is a is a sensible level to be modeling going forward.

Mark Thurston: Do you think 3% is a sensible level to be modeling going forward? Part of that is a fall away because of the performance. We're not going to meet the incentive targets for this year. As we're looking at FY26, some of the wards, which are multi-year, are also falling out of the equation. There's a reversal there. You've got a big reduction in magnitude to those two factors. It is not representative as a percentage of revenue going forward. I think a more realistic level is where we've usually guided, which is about a 3% to 5% of revenue. Okay. Thank you. Then you mentioned testing on an area of kind of efficiency gains. Are there any other areas that you have exposure to?

Speaker Change: Part of that.

Speaker Change: Full away because of the performance.

Speaker Change: Well I'll kind of abate.

Speaker Change: Incentive targets for this year.

Speaker Change: So as we're looking at FY 'twenty six some of the awards, which are multiyear also format in the equation. So there's a reversal of that.

Speaker Change: So you've got a big reduction in quota change of those two factors. So it's not representative.

Speaker Change: As a percentage of revenue going forward.

Speaker Change: I think more realistic level is why we've usually guided which is about.

Speaker Change: Rates of 5%.

Speaker Change: Revenue.

Speaker Change: Okay. Thank you and then you mentioned testing on an area of kind of efficiency gains.

Speaker Change: Are there any other areas that you have exposure to when that comes to mind is BPI.

John Cotterell: One that comes to mind is BPO or any other areas where you're seeing AI automation driving some efficiencies? We're not in BPO. Let's be clear on that. AI-driving efficiency applies to pretty much our whole business. Whether it's requirements gathering, doing consulting, doing development, and so on, we're applying AI to that to make our teams more productive. Actually, I touched on quite a few on the call. We're seeing quite good productivity gains coming through. A lot of clients take that and actually then add additional work. We're getting through their backlogs faster. It's not turning down the amount of work, but it is making us more attractive from a delivery point of view to our clients because of the extra productivity that we have. That's great. Thank you very much. Thanks, Harry. The next question comes from Jonathan Lee with Guggenheim.

Perry Reed: Okay, great.

Mark Thurston: And then maybe more of a housekeeping one. It looks like share based comp as a percentage of sales has dropped versus the last couple of quarters. Do you think 3% is a sensible level to be modeling going forward? um part of that is a fall away because of the performance uh we are not going to meet uh the incentive targets for this year uh and also as we're looking at FY26 some of the wards which are multi-year are also falling out of the equation so there's a reversal there um so you you've got a a big reduction in in qualitatives of those two factors so it is not representative um of the you know as a percentage of revenue going forward uh i think more realistic level is where we've we've usually guided which is about a 3 to 5% of revenue.

Speaker Change: Any other areas, where you're seeing AI automation driving some efficiencies.

Speaker Change:

Speaker Change: But we're not in PPI, let's be clear on that.

Perry Reed: Okay, thank you.

Speaker Change: AI driving efficient say applies to pretty much all business, whether its requirements gathering doing consulting.

Speaker Change: Doing development and so on we are applying it.

Speaker Change: So you got to make our teams more productive.

John Cotterell: And then you mentioned testing on an area of kind of efficiency gains. Are there any other areas that you have exposure to? You know, one that comes to mind is BPO, or any other areas where you're seeing AI automation driving some efficiencies? Um, so we're not in BPO, let's be clear on that. AI driving efficiency applies to pretty much our whole business. So whether it's requirements gathering, doing consulting, doing development, and so on, we're applying AI to that to make our teams more productive. And actually, you know, I touched on quite a few on the call, we're seeing quite good productivity gains coming through.

Speaker Change: Actually I touched on quite a few on the call we're seeing quite good productivity gains coming through.

John Cotterell: A lot of clients take that and actually then add additional work. So we're getting through, you know, their backlogs faster. So it's not turning down the amount of work, but it is making us more attractive from a delivery point of view to our clients because of the extra productivity.

Speaker Change: A lot of clients tight and actually then add additional work.

Speaker Change: So we're getting through that backlogs pasta.

Speaker Change: So it's not turning down the amount of work, but it is making us more attractive from a delivery point of view to all clients because of the extra productivity that we have.

Perry Reed: That's great. Thank you very much.

Unknown Executive: Thanks for watching. Bye.

Speaker Change: That's great. Thank you very much.

Speaker Change: I'm sorry.

Jonathan Lee: The next question comes from Jonathan Lee with Guggenheim. Please go ahead. Great afternoon, guys, and thanks for taking my questions.

Speaker Change: The next question comes from Jonathan <unk> with Guggenheim. Please go ahead.

Jonathan Lee: Please go ahead. Great. Good afternoon, guys, and thanks for taking my questions. I appreciate the candor around the current air pocket dynamic you called out earlier. With the time it takes to ramp core modernization deals once they're signed, as well as the delays related to client decision-making you're seeing today, what gives you confidence that maybe there isn't risk of an extended revenue air pocket later this calendar year and potentially into next driven by a potential lack of large-scale momentum here? I mean, I've sought through this call to give quite a bit of color on the deals that we're working on. I've highlighted that it is actually crucial for us to get out of this air pocket to start closing these deals.

Jonathan: Great. Good afternoon, guys and thanks for taking my questions I appreciate the candor around the current air pocket dynamic you called out earlier, but with the time it takes to ramp core modernization deals once they are signed as well as the delays related to client decision, making or seeing today. What gives you confidence that maybe there is at risk of an extended <unk>.

Jonathan Lee: I appreciate the candor around the current air pocket dynamic you called out earlier, but with the time it takes to ramp core modernization deals once they're signed, as well as the delays related to client decision making you're seeing today, what gives you confidence that maybe there isn't risk of an extended revenue air pocket later this calendar year and potentially into next, you know, driven by a potential lack of large scale momentum here? Um, so I mean, I've, I've sought through this call to give quite a bit of color on the deals that we're working on.

Jonathan: Air Pocket later, this calendar year and potentially into next year.

Jonathan: Given by a potential lack of large deal momentum here.

Jonathan: So I mean I saw.

Jonathan: Through this call to give quite a bit of color on the deals that we're working on.

John Cotterell: You know, I've highlighted that it is actually crucial for us to get out of their pocket to start closing these deals. And so we tried to give a little bit more disclosure on the ones that we're working on, how they're building up, the reasons why we didn't close quite as many, which were, well, I took you through those earlier. So we're trying to give you a lot more color than we would normally do to give you that understanding of what's coming through. It's a strange contrast for us, because on the one hand, it is very exciting to have so many large deals.

Jonathan: I've highlighted that it is actually crucial for us to get out of it is that okay to start closing these deals.

John Cotterell: We've tried to give a little bit more disclosure on the ones that we're working on, how they're building up, the reasons why we didn't close quite as many, which were well, I took you through those earlier. We're trying to give you a lot more color than we would normally do to give you that understanding of what's coming through. It's a strange contrast for us because on the one hand, it is very exciting to have so many large deals progressing to late stages in our pipeline, but at the same time, extraordinarily frustrating that we're not seeing the signatures on them that push them over into seeing the revenue growth come through.

Jonathan: And so we've tried to give a little bit more disclosure on the ones that we're working on how they are building up.

Jonathan: The reasons why we didn't close quite as many.

Jonathan: Which one.

Jonathan: Well I took you through as I said earlier.

Jonathan: So.

Jonathan: I'm trying to give you a lot more color than we would normally do.

Jonathan: Yes.

Jonathan: I'll give you an understanding of that.

Jonathan: What is coming through.

John Cotterell: uh progressing to late stages in our pipeline But at the same time, extraordinarily frustrating that we're not seeing the signatures on them that push them over into seeing the revenue growth come through. And so we're just trying to give you a bit of color on that, that um that I believe will start to pull us out of the air pocket um you know much earlier than the time frames that you were just talking about.

Jonathan: It's it's a strange contrast for us because on the one hand, it is very exciting to have so many large deals.

Jonathan: Progressing to late stages in our pipeline.

Jonathan: But at the same time extraordinarily frustrating that we're not seeing the signatures on that pushed them out.

Jonathan: Into seeing the revenue growth come through.

John Cotterell: We're just trying to give you a bit of color on that that I believe will start to pull us out of the air pocket much earlier than the timeframes that you were just talking about. Thanks for that color, John. Just one follow-up from me. Given some of the ownership changes at one of your top customers, are you seeing any impact on spending or budget priorities there? If so, how is that contemplated in your outlook? We are not seeing any negative dynamics there. We are seeing contracts continuing to sign, etc. There's a lot of momentum on the programs that we're working on. Appreciate that. Thank you. Thanks, Jonathan. The next question comes from Jamie Friedman with Susquehanna. Please go ahead. John, the commentary on the customers is noted and appreciated and helpful. Thanks for that.

Jonathan: And so we're just trying to give you a bit of color on that.

Jonathan:

Jonathan:

Jonathan: The isolate will.

Jonathan: To pull us out of pocket.

Jonathan: Much.

Jonathan: <unk>.

Jonathan: The timeframe that you were just talking about.

Jonathan Lee: Thanks for that color, John.

Jonathan Lee: Just one follow up for me, you know, given some of the ownership changes at one of your top customers, are you seeing any impact on spending or budget priorities there? And if so, how is that contemplated in your outlook? Um So we are not seeing any negative dynamics there. And we are seeing contracts continuing to sign, etc. And there's a lot of momentum on the programs that we're working on. I appreciate that. Thank you. Thanks, Jonathan.

Speaker Change: Thanks for that color John just one follow up for me given some of the ownership changes at one of your top customers are you seeing any impact on spending or budget priorities, there and if so how is that contemplated in your outlook.

Jonathan:

Jonathan: So we are we are not seeing any negative dynamics there.

Jonathan: <unk>.

Jonathan: And we are seeing.

Jonathan: Contracts continuing to sign et cetera.

Jonathan: And there's a lot of momentum on the programs that we're working on.

Jonathan: I appreciate that thank you.

Jamie Friedman: The next question comes from Jamie Friedman with Susquehanna. Please go ahead. John, the the commentary on the customers is noted and appreciated and helpful. So thanks for that.

Jonathan: Thanks, Jonathan.

Speaker Change: The next question comes from Jamie Friedman with Susquehanna. Please go ahead.

Speaker Change: John the the commentary on the customers is noted and appreciated and helpful. So thanks for that.

Speaker Change: D in terms of though looking at some of the things beyond your control like exchange rates I was just wondering mark if you could help isolate.

Jamie Friedman: In terms of, though, looking at some of the things beyond your control like exchange rates, I was just wondering Mark, if you could help isolate some of the exchange rate impact either by some of the other dimensions. Which of these segments is more impacted by exchange rates? Payments was down 13%. Is there any way to land the constant currency approximation for that? I have a quick follow-up. You're talking about quarter on quarter or when you're posing that question, you're talking about Q4 or are you talking about Q3? It would be helpful if you could do it year over year. If one of these segments, I think, expectations based on the peer performance was that some of these segments were stabilizing. If the as-reported numbers for you belie that, could it be because of foreign exchange to some degree? Well, it is.

Jamie Friedman: The in terms of, though, looking at some of the things beyond your control, like exchange rates, I was just wondering, Mark, if you could help isolate some of the exchange rate impact either by some of the other dimensions, like which of these segments is um more impacted by exchange rates is it because like payments was down 13 percent Is there any way to land the constant currency approximation for that? And then I have a quick follow up. You too, Matt.

Speaker Change: Some of the exchange rate impact either by some of the other dimensions like which of these segments is.

Mark Thurston: Quarter on quarter or when you when you are when you're posing that question you talk about q4 or you talk about q3 Uh You know, it would be helpful if you could do it year over year. Like, you know, if if one of these segments I think expectations based on the pure performance was that some of these segments were stabilizing. If The as reported numbers for you belay that. Could it be because of foreign exchange to some degree? Well, it is. I mean, in the well, certainly against the guide, there was an impact about this is, you know, we were previously guiding at the top 200.

Speaker Change: More impacted by exchange rates is it because.

Speaker Change: Payments was down 13%.

Speaker Change: Is it is there any way to lean the constant currency approximation for that and then I have a quick follow up.

Speaker Change: Are you talking about.

Speaker Change: Quarter on quarter Roe.

Speaker Change: You may get posing the question you're talking about Q4 or are you talking about Q3.

Speaker Change: Uh huh.

Speaker Change: You know it would be helpful. If you could do it year over year.

Speaker Change: If one of these segments.

Speaker Change: I think expectations based on the peer performance was that some of these segments. We're stabilizing if.

Speaker Change: The as reported numbers for you, but why that.

Speaker Change: Yeah.

Speaker Change: Could it be because of foreign exchange to some degree.

Speaker Change: Well as well.

Mark Thurston: I mean, in the well, certainly against the guide, there was an impact of we were previously guiding at the top 200, and basically, the FX impact was about GBP 1.5 million. Most of that, you would expect in North America. Actually, we do get some of that hit in the UK because the UK does build some of its clients in US dollars. The main impact by sector going from Q3 to certainly against the guide has been mainly in banking and capital markets because most of the pullback in banking and capital markets was US in that space. We also felt it in the healthcare sector as well. We have a big client, North American Healthcare. We felt it there as well. It's mainly those two sectors where it's certainly against Q3 that we are experiencing that sort of headwind from an FX perspective.

Speaker Change: Well, certainly I guess the guy there was an impact of about.

Speaker Change: Yeah, we were previously guiding.

Speaker Change: At the top 200 and FX.

Speaker Change: The FX impact was about $1 million.

Most about Uni Tech stack 10 no.

Speaker Change: America.

But actually we do get some of that hit in the UK because in the U K does bell Sunrise clients in U S dollars.

Speaker Change: They.

Speaker Change: The main.

Speaker Change: In fact.

Speaker Change: Hi.

Speaker Change:

Speaker Change: Yeah.

Speaker Change: Going from Q3 to study against the guide.

Speaker Change: As seen.

Speaker Change: Magna Bank banking capital markets.

Speaker Change: Uh huh.

Speaker Change: Because.

Speaker Change: Most of the pullback in banking capital markets with U S.

Speaker Change: In that space.

Mark Thurston: And basically, the FX impact was about one one and a half million. Most of that you'd expect in North America. But actually, we do get some of that hit in the UK, because the UK does build some of its clients in US dollars. They The main impact by sector going from Q3 to, certainly against, you know, the guide has been mainly in banking and capital markets, because most of the pullback in banking capital markets was US in that space. And we also felt it in the healthcare sector as well. You know, we have a big client, North American healthcare, so we felt it there as well.

Speaker Change: And we also felt it in the health care sector as well.

The big client North American health care, So we felt that as well.

Mark Thurston: So it's mainly those two sectors where it's only against Q3 that we are experiencing that sort of headwind from an FX.

Speaker Change: So it's mainly.

Speaker Change: Those two sectors.

Speaker Change: Certainly against Q3 that we are experiencing.

Speaker Change: From an FX perspective.

Jamie Friedman: Okay. The top client, by my math, contracted as a percentage of revenue about 190 basis, 2%, which is about GBP 4 million of revenue. What's the backstory on that one? I'm just looking at row 63 of your fact sheet. Yeah. There's a good chunk of that is going to be FX. Yeah. Okay. Got it. Also, there was some follow-on work in terms of that we were talking about in the big deals that got delayed as well, a small amount. There's also a delay in some forward work that we were expecting to happen. Okay. Then similar and last question about the total clients that are greater than GBP 1 million. That one shrunk too by about 6. It's hard to put a number on that because we don't know where greater than GBP 1 million starts or stops.

Speaker Change: Okay, the top client by my math.

Mark Thurston: Okay, the top client, by my math, it contracted as a percentage of revenue about 190 basis 2%, which is about $4 million of revenue. Um, what's the backstory on that one? or just look at row 63 of your fact sheet. Yeah, so there's a good chunk of that is going to be FX. Yeah, okay. Okay, and also there was some follow on work in terms of we were talking about in the big deals that got delayed as well as a small amount, but there's also a delay in some forward work that we were expecting to happen.

Speaker Change: Contracted as a percentage of revenue of about.

Speaker Change: 190 basis, 2%.

Speaker Change: Which is about $4 million of revenue.

Speaker Change: Whats the back story on that one.

Speaker Change: I was just looking at rose 63 of your.

Speaker Change: Gene.

Speaker Change: Yeah.

Speaker Change: There's a good chunk of that is going to be FX yeah. Okay.

Speaker Change: Also there'll be some follow on.

In terms of.

Speaker Change: About the big deals that got delayed as well.

Speaker Change: A small amount, but there is also a delay in some forward what we were expecting.

Speaker Change: Alan.

Mark Thurston: Okay, and then Similar and last question about the total client. that are greater than a million so that one shrunk to by about six it's hard to put a number on that because we don't know where greater than a million starts or stops but I mean we know where it stops we don't know where it starts you know what I mean we don't know how big these are but anyway anything you could share about why you had six less clients doing greater than a million pounds well the greater than a million is on a rolling 12-month basis so there's an element of clients dropping out of you know a quarter, 12 months ago, and additions this quarter.

Speaker Change: Okay and then.

Speaker Change: Similar and last question about the total clients.

Speaker Change: That are greater than a million so that when shrunk to buy.

Speaker Change: About six it's hard to put a.

Speaker Change: Number on that because we don't know where greater than a million starts or stops, but I mean, we know where it stops I don't know where to start.

Jamie Friedman: I mean, we know where it stops. We don't know where it, you know what I mean? We don't know how big these are. Anyway, anything you could share about why you had 6 less clients doing greater than GBP 1 million? Well, the greater than GBP 1 million is on a rolling 12-month basis. There's an element of clients dropping out of a quarter 12 months ago and additions this quarter. You have that done out. It's a little bit of a backward-looking metric. The sort of movement in those 5, we felt most of it has been in TMT, which is a segment that hasn't grown particularly well for us and other. The rest of the sectors like payments, BCM, insurance were basically stable. Got it. Thank you. I'll jump back into Q. The next question comes from Phani Kanumuri with HSBC.

Speaker Change: I mean, we don't know how big these are but anyway anything you could share about why you had six less clients doing greater than 1 million pounds.

Speaker Change: The gradual minions is it on a rolling 12 month basis, So theres an element of clients dropping out of.

Speaker Change: Quarter 12 months ago and additions this quarter. So that you have that delek. So there's a little bit of a backward looking met.

Mark Thurston: So as you have that done, it shows a little bit of a backward looking metric, the sort of movement in those five, we felt most of it has been in TMT, which is a is a segment that hasn't grown particularly well for us and other the rest of the sectors like payments, BCM, insurance were basically staying. Got it. Thank you. I'll drop back in the queue.

Speaker Change: Metric that sort of movement in those five we felt most of it has been in TMT.

Speaker Change: Hum.

Speaker Change: Is that is a segment that hasn't grown, particularly well for us and the.

Speaker Change: The rest of that.

Speaker Change: Sector like payments.

Basically I'm insurance were basically stable.

Speaker Change: Got it thank you I'll jump back in the queue.

Speaker Change: Yeah.

Fani Kanmuri: The next question comes from Fani Kanmuri with HSBC, please go ahead. Hi all. Thanks for taking my questions. So the first one is regarding utilization rate. What are your current utilization rates and where do you expect it to trend during 4Q?

Speaker Change: The next question comes from funny.

Speaker Change: <unk> with HSBC. Please go ahead.

Phani Kanumuri: Please go ahead. Hi all. Thanks for taking my question. The first one is regarding utilization rate. What are your current utilization rates, and do you expect it to trend during Q4? The second one is regarding your guidance for EPS. What are the cost elements that are impacting your guidance for EPS? What is your gross margin that you're looking at? Are there any measures to get the EPS back if the demand environment doesn't improve? Utilization in Q3 was reasonably good, about 72%. We anticipate it'll actually be about that level in Q4. In terms of the EPS, if you're talking about the Q4 reduction, previously, we were guiding about GBP 0.35. The FX has a very outweighed hit there. It's about 6 or GBP 0.01 bringing it down.

Speaker Change: Oh hi.

Speaker Change: Thanks for taking my question. So the first one is regarding utilization need what are your current utilization rates.

Speaker Change: And where do you expect to trend during the <unk>.

Mark Thurston: The second one is regarding your guidance for EPS. What are the cost elements that are impacting your guidance for EPS? What is your gross margin that you're looking at and are there any measures to get the EPS back if they're demanded from us? Utilization in Q3 was reasonably good, so about 72%. We anticipate it will actually be about that level in Q4. In terms of the EPS, if you're talking about the Q4 reduction, there is a big... Previously, we were guiding about...implied guide about 35%. So, the FX has a very outweighed hit. There's about six or pence bringing it down.

Speaker Change: One is regarding your guidance.

Speaker Change: Guidance for EPS.

Speaker Change: What are the cost elements that are impacting your guidance for EPS. What is your gross margin that you are looking at.

Speaker Change: And are there any major sticking at the UBS back if the demand doesn't.

Speaker Change: Yeah.

Speaker Change: Utilization in Q3.

Speaker Change: These good set of about 72%.

Speaker Change: I'll actually be about level in Q4.

Speaker Change: In terms of the EPS, if you're talking about the <unk>.

Q4 production there is a big piece.

Speaker Change: Regarding about.

Speaker Change: Implied guide about 35, so the FX is a savvy outweighed.

Speaker Change: That's about six pence, bringing it down and then you have.

Mark Thurston: And then you have the revenue and gross margin compression that takes it down significantly. We are able to offset some of that through G&A savings and by contribution from the share buyback. But in terms of the sort of gross margin, as you go from Q3, which on an adjusted basis was about 33.5%, it does benefit from the reversal of the bonus accrual because of the shortfall in performance, which is about 1.5%. So, a normalized gross margin is about 32%. What we've got implied in the guide is that we will move up the margin by roughly half a percent through a mixture of holding pricing and an improvement on utilization.

Mark Thurston: Then you have the revenue and gross margin compression that takes it down significantly. We are able to offset some of that through G&A savings and by a contribution from the button share buyback. In terms of the sort of gross margin, as you go from Q3, which on an adjusted basis was about 33.5, it does benefit from the reversal of the bonus accrual because of the shortfall in performance, which is about 1.5%. A normalized gross margin is about 32%. What we've got implied in the guide is that we will move up the margin by roughly 0.5% through a mixture of holding pricing and an improvement on utilization.

Speaker Change: The revenue and gross margin compression.

Speaker Change: Definitely we are able to offset some of that through G&A savings and.

Speaker Change: The contribution from the share buyback.

Speaker Change: But in terms of the sort of gross margin as you go from.

Speaker Change: Q3, which on an adjusted basis was about 33 and a half.

Speaker Change: Does benefit from the reversal of a.

Speaker Change: Bonus accrual because of the shortfall in performance and stuff.

Speaker Change: So our normalized gross margin is about 32%.

Speaker Change: What we've got implied in the garage.

Speaker Change: It is that we will move up the margin by.

Speaker Change: Roughly.

Speaker Change: Half a percent true.

Speaker Change: A mixture of holding pricing.

Speaker Change: And an improvement on utilization.

Mark Thurston: What really takes it down significantly to a level of about 31% is this FX impact on the dollar because the proportion of revenues that we now have, certainly in sort of Q4, are significant. There's something like 45% of revenue. If you have a pullback in terms of the FX rate from a 1.24 to a 1.34, you have a significant sort of headwind and reduction in the revenue, which you've outlined in the guide, about GBP 7 million. The cost base is not dollar-heavy. That pullback on FX has quite a significant impact on the gross margin. Just to give you a sense of the sort of sensitivity to the dollar, say if the dollar moved to, say, 1.30, we would potentially get something like a 1% movement on the gross margin. Okay. Yeah. That's helpful, Mark.

Mark Thurston: But what really takes it down significantly to a level of about 31% is this FX impact on the dollar. Because the proportion of revenues that we now have, certainly in sort of Q4, are significant. There's something like 45% of revenue. So, if you have a pullback in terms of the FX rate from a 1.24 to a 1.34, you have a significant sort of headwind in reduction in the revenue, which you've outlined in the guide, about 7 million. The cost base is not dollar heavy. So, that pullback on FX has quite a significant impact on the gross margin.

Speaker Change: He takes it down.

Speaker Change: Difficultly to a level of about 31% is this FX impact on a dollar because.

Speaker Change: Postpaid revenues that we now have.

Speaker Change: Oh, sorry.

Speaker Change: <unk>.

Speaker Change: For our significant something like 45%.

Speaker Change: So if you have a pullback in terms of the FX rate from.

Speaker Change: 124.

Speaker Change: Two.

Speaker Change: One for you.

Speaker Change: A significant headwind and reduction in the revenue, which you've outlined in the gone about 7% seven 7 million.

Speaker Change: Cost base is not dollar.

Speaker Change: So that's pulled back on.

Speaker Change: FX has quite a significant impact on the gross margin and just to give you a sense of the sort of sensitivity to.

Mark Thurston: And just to give you a sense of the sort of sensitivity to the dollar. So, say if the dollar moved to, say, 130, we would potentially get something like a 1% movement on the gross margin.

Speaker Change: So I'd say, if the dollar move too.

Speaker Change: Say 130.

Speaker Change: T.

Speaker Change: He would potentially get something like a 1% movement on the.

Speaker Change: Gross margin.

Speaker Change: Okay Yeah.

Mark Thurston: Okay, yeah, that's helpful, Mark. So one other question that I had was that you mentioned that you had some integration benefits from Galaxy that will start flowing through this quarter. So going forward, are all the integration benefits already factored in the guidance and have all of them been recorded in 3Q? Most of the benefits that we were getting were in GNA, so we have obviously sort of baked that in. As we saw the comments around sort of like the Q3 EPS, we were able to absorb weakness in the revenue and gross margin by savings on SG&A.

Speaker Change: That's in for Mark.

Phani Kanumuri: One other question that I had was that you mentioned that you had some integration benefits from GalaxE that would start flowing through this quarter. Going forward, are all the integration benefits already factored in the guidance, and have all of them been recorded in Q3? Most of the benefits that we were getting were in G&A. We have obviously sort of baked that in. As we saw the comments around sort of like the Q3 EPS, we were able to absorb weakness in the revenue and gross margin by savings on SG&A. We've not only done it through the integration with sort of GalaxE, we've done it elsewhere. We are absorbing revenue shortfall and gross margin impact by those synergies that we've secured thus far.

Speaker Change: One other question that I had with that.

Speaker Change: You mentioned you had some integration benefits from galaxy that will start.

Speaker Change: You too.

Speaker Change: This quarter, yeah, so going forward.

Speaker Change: All the all of the integration benefit already factored in the guidance and how all that's going to be not recorded in <unk>.

Speaker Change: Most of the benefits we were getting.

Speaker Change: And G&A.

Speaker Change: So we have obviously sort of think about it.

Speaker Change: As soon we saw the comments around the Q3, EPS, we're able to absorb weakness in the revenue and gross margin by savings on SG&A. So.

Mark Thurston: So we've not only done it through, you know, the integration with sort of Galaxy, we've done it elsewhere. We are absorbing revenue shortfall and gross margin impact by those synergies that we've secured thus far. I mean, there is further to go, I think, looking forward into FY26 with further integration with Galaxy as we put together, you know, our global, you know, delivery model. But that will become through operational efficiency, if I can put it that way, through, you know, the gross margin rather than SG&A.

Speaker Change: It's not anytime through the integration, but it sort of colleagues who've done it al is flat we are absorbing revenue.

Fani Kanmuri: Thank you. Thanks.

Speaker Change: So from a gross margin impact by those synergies that we executed thus far I mean, there is further to go.

Laurence Madsen: I mean, there is further to go, I think, looking forward into FY26 with further integration with Galaxy as we put together our global delivery model. That will become through operational efficiency, if I can put it that way, through the gross margin rather than SG&A. Thank you. Thanks, Mark. Thanks, Phani. The next question comes from James Faucette with Morgan Stanley. Please go ahead. Thank you so much, and appreciate all the color here. I wanted to ask a couple of questions related to types of engagement. First, any meaningful traction that you're seeing around GenAI and scaling of those from proof of concept and movement there as we think about that as a growth driver? Yeah. We are seeing a pickup in that.

Speaker Change: Looking forward into FY, 'twenty, six and further integration with Galaxy.

Speaker Change: As we put together.

Speaker Change: Global delivery model.

Speaker Change: But that will be come through operational efficiency, if I can put it that way through the gross margin relative to SG&A.

Speaker Change: Okay.

Speaker Change: Thank you thanks.

Speaker Change: Okay.

James Faucette: The next question comes from James Faucette with Morgan's family. Please go ahead. Thank you so much, and appreciate all the color here. I want to ask a couple of questions related to types of engagement. First, any meaningful traction that you're seeing around Gen AI and scaling of those from proof of concept and, you know, movement there as we think about that as a growth driver? Um Yeah, we are seeing a pickup in that. The But there's also a shift. And we're seeing more opportunities resulting from the shift, which is in the commercial world using agentic AI, which essentially is teams of AI agents, you can get much better quality of output, much better reliability, much better accuracy.

Speaker Change: The next question comes from James Faucette with Morgan Stanley. Please go ahead.

James Faucette: Thank you so much and I appreciate all the color here.

James Faucette: Wanted to ask a couple of questions related to two types of engagement.

James Faucette: First any meaningful traction that youre seeing around.

James Faucette: Jen AI and scaling of those from proof of concept.

James Faucette: <unk>.

James Faucette: Movement, there as we think about that as a growth driver.

John Cotterell: And you're bringing more intelligence to bear. And actually, you know, we're finding there's more applications for that really viable in the enterprise space. And so we're seeing more pickup into the larger project delivery activities that we're doing, some of which I touched on in the opening remarks, than we are in just the pure gen AI type solutions. It's one of the areas where we've been working really well with open AI and Google, hence the announcements about the partnerships and, you know, the leads that are coming through that. So yeah, we are seeing real traction in that and move into larger scale engagements.

James Faucette:

Speaker Change: Yes, we are seeing a pickup in that.

James Faucette: <unk>.

John Cotterell: There's also a shift, and we're seeing more opportunities resulting from the shift, which is in the commercial world using agentic AI, which essentially is teams of AI agents. You can get much better quality of output, much better reliability, much better accuracy, and you're bringing more intelligence to bear. Actually, we're finding there's more applications for that that are really viable in the enterprise space. So we're seeing more pickup into the larger project delivery activities that we're doing, some of which I touched on in the opening remarks, than we are in just the pure GenAI type solutions. It's one of the areas where we've been working really well with OpenAI and Google, hence the announcements about the partnerships and the leads that are coming through that. Yeah, we are seeing real traction in that and move into larger-scale engagements. Interesting.

James Faucette: But there's also a shift.

James Faucette: And we're seeing more opportunities, resulting from the shift which is.

James Faucette: In the commercial world using Gen takeout.

James Faucette: We should essentially is.

James Faucette: Teams with I O agents.

James Faucette: You can you can get much better.

James Faucette: Let's say.

James Faucette: Output much better reliability.

James Faucette: Much better accuracy.

James Faucette: And you're bringing more intelligence to that and actually we're finding there's more applications for that.

James Faucette: Really.

James Faucette: Viable in the.

James Faucette: In the enterprise space.

James Faucette: And so we're seeing more pickup into the.

James Faucette: The larger project delivery.

James Faucette: Activities that we're doing some of which I touched on in the opening remarks.

We are in just the pure Gen II type solutions.

James Faucette: It's one of the areas, where we've been working really well with <unk> and Google.

James Faucette: And hence the announcements about the partnerships.

James Faucette: The leads that are coming through that.

James Faucette: So yeah, we are seeing real traction in that.

James Faucette: Moving to larger scale engagements.

James Faucette: Interesting. And as that's happening, how should we think about that?

Interesting and.

James Faucette: As that's happening, how should we think about that, or maybe how are you thinking about that as a proportion of work or bookings? Just wonder if you're thinking about that as displacing some of your normal run-of-course of work, or are you looking at those as incremental, larger? Just any color on sizing would be helpful. Thank you. We actually see it as a digital shift where the traditional digital work that we have been doing is shifting into an AI-enabled space. Over the next couple of years and over the last year or so, the shift of product work that we've been doing historically that was very digital-oriented in many sectors is shifting to be an AI-enabled product capability.

James Faucette: Is that happening how should we think about that and how it or maybe how are you thinking about that as a proportion of <unk>.

James Faucette: Work or bookings just wonder if that's going to if you're thinking about that is.

James Faucette: Displacing some of your normal run of course of work or are you looking at those as incremental larger just any color on sizing would be helpful. Thank you.

Yeah.

John Cotterell: And how or maybe how are you thinking about that as a proportion of Work or bookings and just wonder, you know, if that's going to if you're thinking about that is displacing some of your your normal run of and course of work or are you looking at those as incremental larger just any color on on sizing would be helpful thank We actually see it as a digital shift where, you know, the traditional digital work that we have been doing is shifting into an AI enabled space. And so, you know, over the next couple of years and over the last year or so, the shift of product work that we've been doing historically that was very digital-oriented in many sectors is shifting to be an AI-enabled product capability.

James Faucette: We actually see as a.

James Faucette: Digital shift where the.

James Faucette: The traditional digital work that we have been doing is shifting into an I O enabled space.

James Faucette: So.

James Faucette: Okay.

James Faucette: Next couple of years over the last year or so the shift of product work that we've been doing historically that was very digital oriented in many sectors is shifting to be.

James Faucette: Now equaled.

James Faucette: So, ultimately, we see the entire organization either in the functionality that is AI-enabled or in the way in which you deliver it being AI-enabled. And we are well into that shift now. That's great. Thanks for all the commentary this morning. Okay, thanks, James.

James Faucette: That capability.

John Cotterell: Ultimately, we see the entire organization either in the functionality that is AI-enabled or in the way in which you deliver it being AI-enabled. We are well into that shift now. That's great. Thanks for all the commentary this morning. Okay. Thanks, James. This concludes our question-and-answer session. I would like to turn the conference back over to John Cotterell, CEO, for any closing remarks. Thank you. Thank you all for joining us today. As I mentioned in my prepared remarks, the business environment continues to evolve rapidly. We are witnessing an increased level of global macroeconomic turbulence since our last earnings call. While our opportunity pipeline continues to grow, it is not converting into signed deals and thus into revenue at the rate that we anticipated last quarter. As a result, we continue to have an elongated ideation-to-production cycle.

James Faucette: So ultimately we see the entire organization.

James Faucette: Either in the functionality that is enabled or in the way in which you deliberate being.

James Faucette: <unk>.

James Faucette: Well, we are well into that shift now.

James Faucette: That's great. Thanks for all the commentary this morning.

James Faucette: Okay. Thanks James.

John Cotterell: This concludes our question and answer session.

Speaker Change: This concludes our question and answer session I would like to turn the conference back over to John Cottrell CEO for any closing remarks.

John Cotterell: I would like to turn the conference back over to John Cotterell, CEO, for any closing remarks. Thank you, and thank you all for joining us today. As I mentioned in my prepared remarks, the business environment continues to evolve rapidly.

James Faucette: Thank you and thank you all for joining us today.

John Cottrell: As I mentioned in my prepared remarks, the business environment continues to evolve rapidly.

John Cotterell: We are witnessing an increased level of global macroeconomic turbulence since our last earnings call. And while our opportunity pipeline continues to grow, it is not converting into signed deals and thus into revenue at the rate that we anticipated last quarter. And as a result, we continue to have an elongated ideation to production cycle. In that environment, we are focusing on getting those deals closed and to control what we can to the best position the business for the long term.

James Faucette: We're all witnessing.

James Faucette: An increased level of global macroeconomic turbulence since our last earnings call.

James Faucette: And while our opportunity pipeline continues to grow is nox converting into signed deals into revenue.

James Faucette: The rates that we anticipated last quarter.

James Faucette: And as a result, we continue to have an elongated ideation to production cycle.

John Cotterell: In that environment, we are focusing on getting those deals closed and to control what we can to the best position the business for the long term. I look forward to speaking to you on our next earnings call in September. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

James Faucette: And that environment, we are focusing on getting those deals closed.

James Faucette: And to control.

What we can to.

James Faucette: So the best position the business for the long term.

John Cotterell: I look forward to speaking to you all on our next earnings call in September. Thank you.

James Faucette: I look forward to speaking to you on our next earnings call in September. Thank you.

Unknown Executive: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

James Faucette: Yeah.

James Faucette: [music].