Company to Restate Previously Reported Fiscal 2026 Financial Results; Expects Revenue Impact for the Year to Be Approximately 2% -- 4% of the Company's Prior Fiscal 2025 Revenue
Does Not Expect to Restate Any Prior Fiscal Years or Any Periods Within Those Years
Board and Management Are Committed to Enhancing Financial Controls and Governance
CEO Retiring and Company Implementing Additional Organizational Changes
Company Remains Focused on Disciplined Execution, Delivering for Clients, and Advancing its AI-Native Strategy
LONDON--(BUSINESS WIRE)--October 28, 2026--
Endava plc $(DAVA)$ ("Endava" or the "Company") today announced preliminary findings of the previously announced internal investigation into the accounting treatment of certain customer and supplier agreements. The Company also announced the potential impact of the findings on its previously reported financial results for fiscal 2026, including the restatement of these results, potential remedial actions and leadership changes. Additionally, the Company provided an update on the anticipated timing of reporting its financial results.
Update on Audit Committee Investigation
As previously announced on September 21, 2026, independent outside counsel for the Audit Committee of the Company's Board of Directors has been conducting an investigation in response to the Company's outside auditors raising concerns about the Company's accounting treatment of certain customer and supplier agreements. The investigation is nearing conclusion, and the Audit Committee has largely completed its review of the findings to date. Based on that review, the Audit Committee has determined that accounting for certain agreements was incorrect and remedial actions are required.
The investigation determined that certain agreements entered into by the Company in fiscal 2026 with counterparties that were both customers and suppliers either lacked economic substance or were negotiated and priced as a single arrangement. Based on the investigation's findings, management determined that the revenue recognition and balance sheet entries for the associated transactions were not in compliance with relevant accounting standards. For certain transactions, the accounting entries are being reversed, and for others, the revenue is being restated to reflect the consideration properly attributable to the services delivered. The counterparties represent approximately 1.5% of all customers as of March 31, 2026. In addition, as part of evaluating the investigation's initial findings, management has identified separate accounting errors relating to revenue recognition.
As a result, the Company will be restating its previously reported fiscal 2026 financial results. Endava's preliminary estimate is that adjustments to its fiscal 2026 revenue will be equivalent to approximately 2% -- 4% of the Company's prior fiscal 2025 revenue. The restatement will also include non-cash adjustments affecting certain balance sheet accounts, including those related to the revenue adjustments as well as goodwill and intangible assets, resulting in a reduction in adjusted profit before taxes. Endava does not expect any adjustments to its fiscal 2025 results and does not expect a restatement of prior fiscal years or previous periods relating to those prior fiscal years.
The Company is also in the process of assessing the impact of this restatement on prior financial covenant compliance under its revolving credit facility. Management is currently in discussions with its lenders as it evaluates these matters. The Company preliminarily estimates that it had cash and cash equivalents of approximately GBP55 million as of September 30, 2026.
In connection with these findings, the Audit Committee has determined that the Company's financial results for the three months ended September 30, 2025, the three and six months ended December 31, 2025, and the three and nine months ended March 31, 2026 (collectively, the "Affected Periods") should no longer be relied upon, including any press releases, shareholder communications, investor presentations, and/or other communications that include or describe the financial results for the Affected Periods. This determination has been discussed with the Company's independent registered public accounting firm, although the firm's audit procedures in relation to the investigation, the fiscal 2026 audit, and the restatement of the Affected Periods remain ongoing.
Material Weaknesses and Planned Remedial Actions
Management is in the process of evaluating the impact of the restatement of its previously reported financial results for the Affected Periods, as well as the Company's disclosure controls and procedures and internal control over financial reporting. Based on the findings of the Audit Committee investigation to date, management has identified deficiencies in its internal control environment, including, but not limited to, tone at the top, and expects to report one or more material weaknesses in internal control over financial reporting.
The Board and management team are committed to taking appropriate remedial actions to address the matters identified through the investigation. These remedial measures are expected to include actions to reinforce an appropriate tone at the top and a culture of accountability and compliance with the Company's accounting, finance, legal and internal control policies; enhancements to the Company's control environment, including changes to accounting and reporting procedures; the hiring of additional qualified finance personnel; and the adoption of enhanced governance and training for relevant personnel, as well as other actions recommended by the Audit Committee and the Company's external advisors. In addition, the Company has implemented and is in the process of implementing certain organizational changes as part of its response to the investigation.
The Company is developing a plan of remediation, the details of which will be included in its Annual Report on Form 20-F for the fiscal year ended June 30, 2026 (the "2026 Annual Report").
Organizational Changes
Mark Thurston, the Company's Chief Financial Officer and a member of the Board, has resigned from both roles, effective October 25, 2026. Conor McShane of AlixPartners, LLP, a leading global business advisory firm, continues to serve as Interim Chief Financial Officer while the Company conducts a search for a successor.
John Cotterell, the Company's Chief Executive Officer and Founder, notified the Board of his decision to retire from his role as Chief Executive Officer, effective October 19, 2027, in accordance with his contractual 12-month notice requirement. The Board, however, has determined that new leadership is critical to moving the Company forward in light of the findings of the investigation. As a result, Rob Machin, the Company's Chief People and Locations Officer, will be appointed as Interim Chief Executive Officer and as an Executive Director of the Board, effective November 2, 2026. Mr. Machin brings to the roles more than three decades of IT industry experience, including more than 15 years at Endava, where he previously served as the Company's Chief Operating Officer.
Mr. Cotterell will continue to support the Company as Founder and Strategic Advisor, and remain on the Board. In this non-executive role as Strategic Advisor, his priority will be to provide continuity for Endava's clients and maintain the relationships he has built over the past 25 years. Mr. Cotterell will also work closely with Mr. Machin to ensure a smooth transition of CEO responsibilities.
Additionally, Rohit Bhoothalingam, the Company's General Counsel and Company Secretary, has resigned from both roles, effective October 26, 2026.
"The Board is committed to acting in the best interests of the Company and its shareholders as we work to complete the investigation and release our audited results, ensure the accuracy of our financial reporting and take appropriate remedial actions based on the final findings," said Trevor Smith, Chairman of the Board, and David Pattillo, Chair of the Audit Committee. "At the same time, Endava has a strong foundation built on deep industry expertise, longstanding client relationships and talented people around the world. We are confident that Rob brings the experience, leadership and perspective needed to guide Endava through this period and support the Company's strategic priorities. Our management team remains focused on disciplined execution, delivering for our clients and advancing our AI-native strategy."
Update on Timing of Financial Reporting
In light of the investigation, restatement of the Affected Periods, leadership changes, and ongoing external audit procedures, the Company does not expect to file its 2026 Annual Report by the November 2, 2026 filing deadline. The Company intends to file a Notification of Late Filing, as provided in Rule 12b-25 under the Securities Exchange Act of 1934, as amended, with the SEC. The Company is working to file its 2026 Annual Report and will announce the timing of its fiscal fourth quarter and full year 2026 earnings release and conference call as soon as reasonably practical. It will also communicate the reporting timeline for its fiscal first quarter 2027 financial results after the filing of its 2026 Annual Report.
Non-Reliance; Preliminary Estimates and Financial Information
Due to the findings of the Audit Committee investigation to date and the ongoing restatement of the Affected Periods, the Company's previously issued financial guidance for its fiscal fourth quarter and full year 2026 should no longer be relied upon.
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