Endava at Bank of America Conference: AI Challenges and Opportunities

On Wednesday, 04 June 2025, Endava (NYSE:DAVA) participated in the Bank of America Global Technology Conference 2025, highlighting both the challenges and opportunities it faces in the evolving technological landscape. While the company navigates hurdles in AI implementation, it remains optimistic about increasing deal sizes and volumes, particularly in the banking and capital markets sector.

Key Takeaways

• Endava is focusing on AI integration to modernize legacy systems and increase productivity.
• The company has revised its guidance approach to emphasize the business run rate, treating large deals as incremental.
• Banking and capital markets are expected to continue strong performance, while mobility is anticipated to recover.
• Endava aims to become "AI native," integrating AI into daily operations for all employees.
• Payments performance has decreased, but improvement is expected in FY 2026 with potential large deals.

Financial Results

• Payments have reduced by approximately 50% from peak levels, influenced by spending cuts from major clients.
• Endava has pulled back its guidance in Q4 due to challenges in predicting deal signings.
• Future guidance will focus on the business run rate, with large deals expected to provide significant revenue increases.

Operational Updates

• Endava is addressing AI implementation challenges such as hallucination, scalability, and regulatory compliance.
• The company has integrated Galaxy, enhancing its core modernization tools and expanding its reach in the APAC region.
• Large deals are increasing in both number and size, with clients now raising budgets for transformation programs.

Future Outlook

• Banking and capital markets are anticipated to remain robust, with insurance also performing well.
• The mobility sector is expected to recover, potentially benefiting from big deals in the automotive space.
• Endava is working to ensure productivity gains from AI are converted into a backlog, as it becomes more cost-effective for clients to build new systems.

Q&A Highlights

• Endava’s strength in banking and capital markets is complemented by steady growth in insurance.
• The company’s healthcare sector is gaining traction with core modernization capabilities.
• APAC clients are being serviced through nearshore capabilities in Malaysia and Vietnam.

Readers are encouraged to refer to the full transcript for a more detailed understanding of Endava’s strategic insights and operational updates.

Full transcript - Bank of America Global Technology Conference 2025:

Tyler Dupont, Payments and IT Services Team, BofA: Alrighty. So good good afternoon. Thanks everyone for for joining today. My name is Tyler Dupont. I’m on the payments and IT services team here at BofA, and I am excited to have Endava CEO, John Cotterell, and CFO, Mark Thurston joining me for what I can only imagine will be a very productive and exciting discussion.

Wanted to jump right in given we’re limited on time. John, you’ve been with Endava since the beginning, so you’d be the perfect person to give us a quick intro. For those less familiar with the story, what are the types of service offerings that Endava specializes in? Who do you serve on a day to day basis? How do you position yourself in the market?

And then as a second question to Mark, you’ve been with the team for around ten years now, pretty almost like a month ago, right? Give or take. Maybe just your perspective on how Endava has evolved during that time as well.

John Cotterell, CEO, Endava: Sure. So, yeah, I was the founder of Endava back in February 2000. So we’ve just hit our 20 birthday. Congratulations. Quite a few changes go across the world, which, you know, if if you if you look back to when I founded the business, the .com boom boom was in full flight, all driven by the Internet and the revolution that was coming through from that.

That then hit a pause as you went into the February, ’2 thousand and ’2, ’2 thousand and ’3, during which time we in Endava and others in the industry were working on what is the engineering around the Internet and how does that get implemented into the enterprise. And we kept up with this approach, which was around is you don’t go into the core, you leave the legacy systems alone and you build capability around the outside and API in what you need and so on. And as that came through, we went into the digital transformation wave, which in Daviv, as we grew, became a leading player in around our whole approach, which was around ideation to production, multidisciplinary teams, how you integrated creatives who can come up with new product ideas, with engineers who can make sure those product ideas are viable in the real world and then are going to scale as you put them into the market. And so that drove that digital transformation wave. It ran for about twenty years.

We grew 20%, thirty % a year, mostly organically through all of that period. You had little kickers that came along the way, things like mobile, things like cloud, but it was all following the same basic shape. Then if you look the last couple of years, we’ve had another major technology shift coming through in the form of AI, and that creating a whole shift in what is needed and what the opportunities are for businesses. And I think we’re going through a similar lull right now as we went through in 2001 through 2003 around getting the engineering, getting the application, getting the use cases and so on out of AI applied into the enterprise world. So that’s very much where Endava is focused.

We’re very much at the change the business rather than keep the lights on and run the business end of the spectrum. A bit more exposure to discretionary Interestingly, the twenty years of the digital transformation wave, even when discretionary spend was pulled back, we still carried on with the sort of 20% plus organic growth. So it didn’t impact us hard. This time, it has impacted us. And I think that’s just because of the more fundamental nature of the shift that’s going on with AI coming through.

Interesting.

Mark Thurston, CFO, Endava: That’s excellent. Yes. So I joined John and the team pre IPO to get us ready. It was basically about putting in robust forecasting processes. We sure they existed, actually.

But being able to report their numbers to SEC sort of standards. It’s been a fantastic journey, grew very, very quickly, executed faultlessly, I’d say, beat and rise cadence. We’ve built a very solid platform over that period of time geographically, global delivery capability. A little bit more choppier more recently, which I know that we all sort of touch on, but it’s been a great experience. But we’re into this mystical, choppy period at the moment.

Tyler Dupont, Payments and IT Services Team, BofA: Yeah. I’m glad you brought that up because I think it’d be remiss if I don’t lead with that macro environment that we’re in right now is, I think, volatile is is a polite word for it, you know, and ratchet up meaningfully. The historical context is helpful as well. So maybe if you could just sort of double click on that, sort of where are we now? How is that compared to prior cycles?

And what are the types of of projects that enterprise decision makers are partnering with Endava on, and how does that change in this macro?

John Cotterell, CEO, Endava: Well, I think I think the thing that I would highlight that is going through the biggest change is is getting the engineering around the implementation of AI into an enterprise environment right. All sorts of things like, you know, these strong brands are not going to put solutions in place that are going to hallucinate in front of their customers. So how do you solve for that? Largely, we’re there. And AgenTik solutions are certainly going to help make that even better.

The resilience and scalability that comes, you know, they don’t want solutions that are going to work at a at a proof of concept level, but then are not going to work when exposed to their customer base. There’s a lot of the industries that we work with. There’s been regulators to manage and go through the process of regulatory confidence around the use of AI in the environments that they regulate. And those are moving forward. There’s still more work to be done, but they’re no longer blockers to actually being able to progress with programs.

And then, you know, the two big ones. One has been business cases. And if you go back a year or eighteen months, a lot of the business cases weren’t standing up. So you could demonstrate that AI does the job. It does a good job, subject to the engineering items being right that I just took you through.

But the business case didn’t stand up because the processing costs of driving the AI was so high. Now you can design for that so you can start to abstract out elements of activity that don’t need to be processed in a GPU type environment and bring the cost down. It all takes more work, more design. But that curve is now starting to come down that price curve coming down is now coming down to a level where actually those business cases are getting more robust, and clients are getting more confidence that the curve carries therefore they can progress with their programme. So we’re starting to see that coming through.

And then the last big one is the state of enterprise systems. So a lot of them have legacy systems, And those legacy systems make it really hard for AI to be, you know, 100% effective. So if someone phones up and has a problem with their bill and you actually want an AI to be able to handle the call and sort it, it has to know how the bill got created, what its options are around, you know, I’ll use the word negotiating with the client. And then it has to be able to action the result of that back into the systems to make a change to the bill to, do a credit or whatever. That’s actually incredibly difficult to perform with the legacy systems that exist in a lot of client organizations.

Now the good news is that, leaving legacy systems alone, which was part of that digital transformation wave I was talking about, because of the difficulty of transforming them, that can actually be helped by the use of AI. So we have established, tools and then layered AI over the top of them that help you actually understand what’s going on in the client’s, core stroke legacy system. And then knowing the start point, you can actually map out a transformational program that gives much greater assurance, much faster execution than they’ve previously been able to do. And we’re seeing those programs kicking off. And actually, some of them are at large scale with clients now.

And we’re working on a lot of transformation deals with clients that are around that end to end you know, AI benefit into the business through to the core modernization process that sits underneath it.

Tyler Dupont, Payments and IT Services Team, BofA: Yeah. That that’s interesting and actually segues nicely to the larger deals that you’re signing. That’s been a topic that’s come up recently, and I feel like there’s been this, and I think it was mentioned on the call, some not necessarily pausing, but delayed spending, so particularly in the back half of calendar twenty five. So so are there any updates there you can provide? What are you seeing in the market converting bookings to revenue?

The large deals seem encouraging on a go forward basis, but seeing where we are today, how should we be thinking about that?

John Cotterell, CEO, Endava: So the large deals, they’re increasing in number, and they’re increasing in average size as a result of the work we’re doing with clients. And I would like you know, I’d like to add that these are deals that result out of the ideation phases that we’re doing with clients, which are becoming extended in these cases. But nonetheless, these are periods of time where clients are paying us to do the consulting, the engineering, the design work, and so on, on these solutions. It’s not just a sales cycle. It is a conclusion of work that they’re actually paying us to do.

So those are increasing in size and in number. The challenge that we had over the last twelve months, which was prove that the engineering works so that we can press the button on these deals, is moving to, you know, clients raising budget to actually, do those transformation programmes. And then, you know, in the latter stages, they are finding with AI being so core to it, that actually they’re hitting unexpected issues like legal departments sticking their hand up and going hang on have we made sure we’re compliant with EU regulations of all sorts of things across the organization? So our clients are essentially going down the learning curve of how to buy in this space. And then having gone down that learning curve, we expect to see a more regular cadence come through as everyone knows how to get these things from idea into let’s start building this.

Tyler Dupont, Payments and IT Services Team, BofA: And what are the duration of that like ideation phase that we’re in right now? I feel like historically, you know, it’s been fairly quick to go from ideation to production. Now it feels like that’s you know, the projects aren’t canceled or anything, but you’re sort of in that stage for longer. Just sort of walk us through that.

John Cotterell, CEO, Endava: So, I mean, during the digital transformation wave, we saw three to six months as being an average ideation production. The significance being during ideation, you’re running, I don’t know, a team of seven or eight maybe. When you go into production, that could 10x or even more. So you see the big step up in revenue when you move to the production phase. This phase around the AI shift, we’ve seen that being over a year, and some of them have actually hit two years, where we’re hitting that paid design ideation phase still going on.

Obviously that’s our number one focus as a business at the moment is to get these a number of these deals over the line because that’s what’s going to enable us to turn the nose up on the revenue.

Tyler Dupont, Payments and IT Services Team, BofA: Great. Yes. So I’m glad, again, we brought the deals because I it might be helpful if you could help remind us this sort of the relative strength you’re seeing from a deal size perspective of the larger deals, seeing more strength of the smaller deals. And just from the larger deals you have signed, I believe there were five that were signed in the quarter. How should we be thinking about the ramp timing of revenue as we look into into the back half?

Mark Thurston, CFO, Endava: So I mean, it ties back to sort of our guidance, so we pulled back quite sort of strongly in Q4. We had an issue actually predicting when these deals were going to sign, and John sort of talked you through some of the sort of reasons there. I think given we don’t have the feel for the cadence of the progress, I think it will come over time. We’re basically going to sort of take an approach going forward looking at guiding, which we’ll do in September, that we will look at the sort of run rate of the business. So this is the non big deal step change type of increments that we found difficult to sort of predict when they will happen.

So the approach will be that we will look at the run rate of the business as we exit Q4. We’ll make guidance around how we when it’s going be flat, it’s going to inflect slightly upward or inflect slightly downward, etcetera. So we have to be careful about how we set that expectation. But in terms of these larger deals, I think we will just include them in the guidance as we land them because they do produce this material step up. So there’ll be a let’s call it, a bedrock of the business, an underlying sort of run rate, and the big inflection is going to come from these big deals, basically.

And like John was saying, it’s also the cadence at which some of these big deals accelerate. Some of them will step change almost immediately. Others, it may be a build in terms of the revenue sort of profile is what that duration is. Sure.

Tyler Dupont, Payments and IT Services Team, BofA: So because of this uncertainty, it’s a bit more prudent to leave those deals on the side for now. And then when they hit, they hit. Yes. Okay. That that

Mark Thurston, CFO, Endava: makes I

John Cotterell, CEO, Endava: think when client when we see that regular cadence of clients being able to push these through their process with a much more higher level of certainty around that cadence, then we can start building it in. But they’re probably at least nine months away,

Tyler Dupont, Payments and IT Services Team, BofA: if not long. Yeah. Sure. Sure. So it sounds like based on this conversation and earlier today that not all of your end markets have been experiencing the macro environment evenly.

You know, at a high level, it might be helpful if you can break out sort of what you’re seeing in the demand environment across your universe of clients. I would assume, you know, the I would just say maybe the mobile business is not quite as robust as, like, your insurance business or just any color commentary there?

John Cotterell, CEO, Endava: So the area where we’ve had real strength over the last twelve months has been the banking and capital markets arena. That’s been followed by insurance, which has been steady, sort of low double digit, high single digit like growth over that period year on year. And different factors driving that. So if look at the BCM space, it has been some of the core modernization activities that I’ve been talking about, and those programs are actually starting and ramping. And that’s been a strong factor in the growth there.

There’s actually been a second factor, which is our payments capability. We have payments as a vertical where we report on the activity we have with the payment processes. But if we do payments work in another vertical, like retail or in this case banking and capital markets, we report that within the banking and capital market vertical. And so we’re actually seeing the payments capability being quite a strong tailwind in the BCM space. Essentially, looking at, merchants and so on as being their customers and how can they use payment capability to make that relationship stickier, because of the information it gathers.

Either as a value add layer over what the payment processes do, which we’re helping them build, or some of them are going deeper into the whole process, which results in large programs. So that, you know, whilst payments as a vertical has had a lot of headwinds, actually if you look at it as a vertical and as a horizontal, it’s been much more stable, holistically. The insurance space has been a lot about data and AI driven. So actually, how do you help the underwriters? A lot of it’s in the broking space.

And so that’s where we’ve seen a lot of that momentum coming from. Essentially, being constrained by a legacy system issue, you’ve been able

Tyler Dupont, Payments and IT Services Team, BofA: to get on with delivering AI benefits more quickly. What’s the sustainability like of that, you know, revenue growth that you’re seeing in in those verticals? They’re seeing pretty meaningful outperformance. It sounds like it’s, you know, the the core modernization work. It’s the AI work, which tends to have a long run rate.

So should we just assume that those are the growth rates for the foreseeable future or just what visibility you have in those verticals that you are allowed to talk about,

Mark Thurston, CFO, Endava: if at all? So I think we will see going forward, I don’t really want to comment on FY 2026. Of course. We’re going through a budget process, etcetera. But I think those sort of dynamics that we John’s been through, we see banking capital markets remaining pretty strong.

Quite a lot of the pipeline, the larger deals tend to be in that sort of space. And then we see some payments, payers in that space. I think insurance will also continue to perform reasonably well. I think TNT, for us, struggles a little bit. It’s muted sort of performance.

And we expect, I think, time, sectors like mobility to come back. There’s a little bit of hesitation around automotive at the moment, which you can understand given that sort of tariffs at the moment. But there is a strong sort of disruptive wave going through that space, and we are getting quite a lot of traction in terms of big deal deals that we see

Tyler Dupont, Payments and IT Services Team, BofA: in the pipeline. Great. That that that’s helpful. And then you mentioned payments a few times, but the payments vertical was facing some one off headwinds related to a large client ramp down. So would you say that the demand trends you’re seeing across that vertical outside of that one client are relatively stable, or is there any other underlying dynamics as you just try to peel away that one buy in issue?

Mark Thurston, CFO, Endava: Well, I mean, John can jump in here. Mean, we’ve seen a big reduction in payments from the peaks, we’re like 50% to where we

Tyler Dupont, Payments and IT Services Team, BofA: are

Mark Thurston, CFO, Endava: now. It’s dominated by two or three large clients who have pulled back on spend, and not in all cases. Our biggest payments client has reduced spend with us, which is around a particular sort of product, if I can put it that way. But on the other hand, our second largest payments client has actually sort of grown. I think generally, we’re seeing now, I think we’re around the sort of bottom with payments.

Still, I see it improving in FY 2026, probably

Tyler Dupont, Payments and IT Services Team, BofA: not, subject to these large deal space that they’ve been talking about. That’s helpful. Switching gears just a little bit here. You know, the Galaxy acquisition has meant healthcare has become an increasingly large portion of your business. And I’ll touch on Galaxy itself in a few minutes, but maybe it’d be helpful to hear from a vertical perspective of any trends we’re seeing within the health care space.

I know there’s been a lot of volatility in the market, particularly on the payer and provider side. So are there any dynamics worth calling out in health care?

Mark Thurston, CFO, Endava: So health care is one

John Cotterell, CEO, Endava: of the spaces where we’re getting real traction around the core modernization capability. Essentially, a lot of those underlying tools that I was talking about that enable you to read the code and see what it does came with the Galaxy acquisition. And so they have had those in place with a lot of their health care clients, deal. What getting together has enabled us to do is to for Endava to add that sort of AI overlay. That means that you can do a lot more with the information that we’re gleaning through those tools.

And then secondly, client confidence around us taking on larger, programs as a bigger business, is higher. And so we’re actually seeing some really opportunities come through and progressing in the healthcare space. So alongside the BCM space, that’s where we’re also seeing a lot of this core modernization work actually happening. Two very strong industries for us to be able to create those case studies and credentials to share with clients alongside the tools that

Tyler Dupont, Payments and IT Services Team, BofA: we have. Great. And so your largest client as well is in the health care space as of now. Right? That’s where where do they sit within the ecosystem, and how has that relationship evolved over the past year now as an Inkava client?

John Cotterell, CEO, Endava: So they sit in the PBM space mainly, but they’ve also got some, of the insurance, you call that payer here, a capability. So the relationship’s been good. The business has largely grown if you look at it year on year, and there’s good core modernization work going on there and a good stream of opportunities that we’re working through with them. So it’s generally in a good place. Great.

No issues. Yeah.

Tyler Dupont, Payments and IT Services Team, BofA: I’d like to see that. And so I said I would get back to Galaxy, so I’ll mention it now. You know, from my understanding, the business has been officially integrated to Endava as of this past quarter. How has that integration progressed versus expectations?

Mark Thurston, CFO, Endava: I think it’s gone smoothly. I mean, we took a bit of a risk in that we cut over onto financial systems at the quarter end, always a bit of risk, but no issues. I think the team have embraced the change because we have a cadence that we have to, in terms of reporting, that they have to adhere to forecasting that’s a higher level of granularity than they’ve been used to. And the Galaxy team have responded to that very well. I think they’re settling in now as we go towards the June.

I think there’s further integration underneath the covers rather than a systems perspective that we’ll see over the course of the next twelve months through FY ’twenty six. A lot of cross team sort of working. We do it a little bit at the edges. It needs to be more integrated. But it’s gone very well, actually.

I think

John Cotterell, CEO, Endava: I mean, Mark’s picking up mainly on the back end there. If you look at the go to market, I’ve already highlighted a few areas where we’re seeing benefit in the banking capital market space, where together we’ve been winning business, likewise expanding in the healthcare space. The other area where we’ve seen opportunity emerges around India. They had an India footprint. We’ve had some of our traditional Indava clients come and say, can you do nearshore for us in India?

Because we have delivery operations there, and that’s led to some growth. I mean, not huge, about 200 people. But nonetheless, that’s been a benefit that’s come out of that.

Tyler Dupont, Payments and IT Services Team, BofA: I’m glad you brought that up because the acquisition gave and have a unique exposure to APAC that it didn’t have prior. Now how have clients really responded to this newer delivery capability set? Are you seeing clients source their work from just a wider range of geographies now? Or is the delivery model any different?

John Cotterell, CEO, Endava: I mean, we’ve had a near shore delivery model. It gives us a far shore capability. We’re tending to use that more in the core modernization scenario. If you think about near shore, it was very strong for new product ideation and creating teams that are in similar time zone for client for creating new products. And that absolutely has a role going forward.

If you look at the core modernization, you’re essentially using tools to understand what the client’s existing system does and then using the outputs of that to, be able to create the future picture, of that system and re engineer it. You don’t need to be near shore to a an SME on the client side in the same way. And so we can deliver that from a location like India, which is what Galaxy had been doing. It’s not competing with the India pure plays because it’s very technology enhanced in terms of what we’re doing in terms of using the accelerators that we have. So that’s very much the positioning of the role that India plays.

For places like Australia, Singapore and so on, we’re tending to use Malaysia and Vietnam, which are our other locations in the region as that sort

Tyler Dupont, Payments and IT Services Team, BofA: of near shore service provider. Great. So I have a bunch more questions, but given we’re limited on time, I want to just quickly poll, see if there’s any questions in the audience that worth worth just taking a second and seeing if there are any that I can keep going. Okay. I’ll keep going.

So we we’ve talked about AI quite a bit over the past twenty eight minutes now effectively. How are you but that’s from more of a a go to market and a sales perspective. How is Injava using AI internally in the business? You know, are there a certain level of productivity gains that can be capitalized on by using AI? How many of your employees are AI enabled?

And you’ve

John Cotterell, CEO, Endava: So let me pick up on the general picture. So we’ve set ourselves a challenge of being what we call AI native, meaning that everyone uses AI in their job every day. We’ve given them everyone. We did a global enterprise agreement with OpenAI. We’re a strong partner with OpenAI.

That has enabled us to give everyone access to ChatGPT. Some people also have access to CoPilot, depending on the nature of the actual work that they’re doing, and a big focus on getting that into the way people work and maximising the productivity benefits of that in development work, testing work and so on. And we’re also doing it within the sort of G and A world. Yes,

Mark Thurston, CFO, Endava: yes, We use it basically for examples in finance where we go to read the contracts basically and get to a quicker you know, accounting judgment, how we should, you know, rev rev rev rec rather than having a team doing it. I think that’s only just the start of it, basically. Interesting. Interesting. And so that

Tyler Dupont, Payments and IT Services Team, BofA: that’s good to good to hear. And I guess one concern that we get from investors on our side is that the increasing use of AI internally generates a lot of productivity gains, but it could also lead to a form of cannibalization as your T and M model gets the dynamic that is involved there. So have you seen any of that? Are you moving more towards an outcome based model to adjust for that? And just are there any gains that you’re sharing with the clients?

Just trying to figure out the mix dynamic.

John Cotterell, CEO, Endava: So I mean we’re expecting and seeing already big productivity gains, but expecting to see even bigger productivity gains. The thing that I would say is productivity gains have been a feature of our industry since the air dot. Even if you look over the last twenty years through that digital transformation wave, there were huge productivity gains that came through the use of open source, for instance. You know, a sort of 2x, 3x type, gain in productivity because you’re essentially reusing code and not writing it from scratch every time. There will be similar productivity gains that, you can get through the use of AI.

The history of our industry is that those productivity gains get converted into backlog because it gets cheaper for clients to write new systems. And as it gets cheaper, the business cases stand up better and clients want more systems. And so it creates more work. And so the productivity gain that we had over the last twenty years, through open source was massive, but we still saw the industry grow enormously. I think we’ll

Tyler Dupont, Payments and IT Services Team, BofA: see the same effect with AI. So it sounds like it’s a flywheel effect of demand begets demand. Yeah.

John Cotterell, CEO, Endava: And we’re already seeing that. We’re already seeing, you know, we’re delivering productivity benefits to clients through the use of AI. They’re asking us to do more work. They’re not saying, okay. Stop.

Tyler Dupont, Payments and IT Services Team, BofA: Sure. That that that makes sense. And I have a million more questions, but we’re out of time. So I wanna thank everyone for for joining us today. Thank you, John and Mark, and thanks everyone else.

Thank you all for your time. Thank you.

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