Antonio Jaramillo

Antonio Jaramillo asked for confidence in the strong acceleration implied in the fiscal year 2026 guidance for the back half, particularly regarding the three large deals, and about Endava's capital allocation priorities between AI investments and share buybacks.

Answer

CEO John Cotterell confirmed the three large deals are signed and committed. CFO Mark Thurston added that these deals, along with pipeline conversion, underpin the H2 ramp, and the guidance range accounts for pipeline risk. John Cotterell stated the share buyback program continues, and AI investments are a strategic priority, impacting short-term margins for future profitability.

Antonio Jaramillo asked about the strong acceleration implied in Endava's fiscal year 2026 back-half guidance, seeking confidence in the three large deals contributing as expected. He also inquired about Endava's capital allocation priorities, specifically balancing AI investments with share buybacks.

Answer

CEO John Cotterell confirmed the three large deals are signed and committed, with revenue ramp-up in H2. CFO Mark Thurston added these deals are additive, layering onto the run rate, and underpin confidence, with the guidance range accommodating pipeline conversion risk. He stated the share buyback program continues, and AI investments are impacting near-term margins, sacrificing short-term profitability for future upswing.

Antonio Jaramillo from Morgan Stanley asked for an update on the GalaxE acquisition, including the integration progress and its contribution to the expected increase in profitability in the second half of the year. He also inquired about the dynamics of the employee bench and utilization trends.

Answer

CEO John Cotterell reported that the GalaxE integration is well-progressed, with a systems cutover planned for the end of the month. He stated that profitability is improving through G&A optimization, with more opportunities expected as the organizations align further into fiscal 2026. Regarding the bench, he described it as stable and historically low at 6-7%, with utilization expected to increase modestly through efficiency gains.

Antonio Jaramillo asked for an update on the GalaxE acquisition integration progress and how it contributes to the expected increase in profitability. He also inquired about bench dynamics and utilization trends.

Answer

CEO John Cotterell reported that the GalaxE integration is well-progressed, with systems cutover planned for the end of the month. He stated that profitability improvements are initially coming from G&A cost optimization, with more opportunities expected as the organizations align. On utilization, Cotterell mentioned the bench is stable and historically low, with utilization expected to rise modestly due to efficiency gains from internal tools.

Antonio Jaramillo, on behalf of James Faucette at Morgan Stanley, asked about the company's Generative AI investment strategy, the specific types of investments being made, and any early signs of return on those investments.

Answer

Acting CEO Jason Macdonnell explained that the fast pace of Gen AI allows for quick ROI. He outlined three key investment areas: 1) platforms to manage the crowdsourced talent for LLM training, 2) tools to manage project execution and generate quality insights, and 3) developing top-tier talent and proprietary datasets to support client model development.

Antonio Jaramillo of Morgan Stanley inquired about the strategy for managing low-margin contracts and the investment approach for Generative AI, including how it is priced into new client engagements.

Answer

CFO Rob Del Bene explained that DXC aims to improve unfavorable contracts at renewal by working with customers on price and terms, rather than exiting them. President & CEO Raul Fernandez stated the company's AI strategy is focused on 'learning by doing' internally and with clients, with the current year focused on experimentation before scaling.