Endava plc (DAVA) DCF Valuation & Fundamental Primer
Endava plc (DAVA) trades at $47.55 with a market enterprise value of $2.90B and generated $772.3M in TTM revenue and $48.1M in free cash flow (filed 2025-09-04 (period ended 2025-06-30)). Our 5-year DCF model estimates an implied intrinsic value of $16.42 per diluted share ($1.08B DCF enterprise value, Grade: B+ · 70/100 · Quality Software Operator).
SEC 10-K/10-Q DCF teardown of Endava plc (DAVA): $772.3M TTM revenue (14.7% growth), 25.1% GAAP gross margin, 6.2% FCF margin, 4.1% SBC/revenue, and Rule of 40 score of 20.9%.
Endava plc (DAVA) earns a "Pass" rating and an institutional Quality Score of 70/100 (Grade B+). On $772.3M in baseline revenue (14.7% growth, 25.1% gross margin, 6.2% FCF margin), our 5-year DCF yields an Enterprise Value of $1.08B ($16.42/share vs. $47.55 market price). On the R&D Return Benchmark, DAVA ranks #1 of 174 (Harvesters · Grade AAA, 28459117.83× return).
Gross Margin & Unit Economics: Endava plc operates at a 25.1% gross margin on $772.3M revenue (47.4 pts below the Software - Infrastructure median of 72.4%).
R&D Productivity (Harvesters · Grade AAA): Investing 0.0% of revenue in R&D ($0) generates $28459117.83 of incremental gross profit per R&D dollar (Rank #1 of 174).
Rule of 40 & Cash Conversion: Combining 14.7% top-line growth with 6.2% FCF margin yields a 20.9% Rule of 40 score (vs. 38.4% cohort median) and $1.08B DCF Enterprise Value.
3-Statement Financial Schedule & 5-Year Horizon
Synchronized directly with the 3-Year Operating Statement (25.1% Gross Margin · 14.7% Growth)
| Income Statement Line | Year 1 (2026) | Year 2 (2027) | Year 3 (2028) |
|---|---|---|---|
| Revenue | $772.3M | $885.7M | $1.02B |
| Cost of Revenue (COGS) | ($578.6M) | ($659.1M) | ($750.9M) |
| Gross Profit & Margin | $193.7M (25.1%) | $226.6M (25.6%) | $265.0M (26.1%) |
| Research & Development (R&D) | $0 | $42.5M | $46.7M |
| Sales & Marketing (S&M) | $116.8M | $128.6M | $141.3M |
| General & Administrative (G&A) | $45.4M | $50.0M | $55.0M |
| Operating EBIT | $31.5M (4.1%) | $5.5M (0.6%) | $21.9M (2.2%) |
| Adjusted EBITDA | $50.8M (6.6%) | $27.6M (3.1%) | $47.3M (4.7%) |
3 Key Underwriting Risks
Structural sensitivities monitored in the 3-Statement Financial Engine
Value-Creation Levers · Quantified Statement Impact
Apply any lever below to write its operating assumptions directly into the 3-Statement Model
Automate cloud hosting & support workflows to lift gross margin from 25.1% to 30.1%.
Align R&D intensity and ASC 350-40 capitalization to the R&D Compounders cohort median, recapturing $15.4M in annual EBITDA.
Lift net dollar retention and expansion velocity by +300 bps, compounding Year 3 revenue to $1.07B.
Endava plc (DAVA) 3-Scenario DCF Valuation Range
Stress-test DAVA's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Simulate how deploying Gemini workflow automation and autonomous engineering expands DAVA's Gross Margin, FCF Margin, DCF share price, and 2x2 R&D Return Quadrant.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $47.55).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $31.04 -35% | $33.12 -30% | $35.54 -25% | $38.41 -19% | $41.85 -12% |
| 9.3% | $27.65 -42% | $29.29 -38% | $31.17 -34% | $33.35 -30% | $35.91 -24% |
| 10.0% | $24.87 -48% | $26.18 -45% | $27.68 -42% | $29.38 -38% | $31.35 -34% |
| 10.8% | $22.54 -53% | $23.61 -50% | $24.82 -48% | $26.18 -45% | $27.74 -42% |
| 11.5% | $20.56 -57% | $21.45 -55% | $22.45 -53% | $23.56 -50% | $24.80 -48% |
Institutional Software Quality Scorecard (70/100 · Grade B+)
Solid software model with clear operating leverage, partially offset by standard SBC or moderate burn.
Elite deferred revenue float; FCF exceeds operating income by >20%
Minimal dilution friction; management compensation aligned with shareholders
Sub-par gross margins; higher cost of delivery or hardware/services mix
Moderate leverage or cash burn; monitor liquidity runway
Core Investment Strengths & Moats
- High-grade cash conversion: FCF is 153% of EBIT driven by upfront annual collections
- Low dilution friction: SBC is only 4.1% of revenue
Key Operational & Dilution Risks
- Lower software gross margins (25.1%), indicating higher hosting or service delivery drag
Compare Endava plc (DAVA) against the software universe on the 2x2 R&D Return vs. R&D Intensity matrix.
Reverse-DCF Solver: What Growth is Priced Into DAVA?
The current share price demands 41.9% 5-year CAGR (45.1% net of SBC & dilution)—a +27.3% acceleration over historical run-rate (14.7%). Any growth slowdown risks valuation multiple contraction.
Headline Reverse-DCF ignores Stock-Based Compensation (4.1% of revenue) and annual share dilution (1.4%/yr). Accounting for both requires 45.1% 5-year revenue CAGR to justify $47.55/sh on a true per-share economic cash flow basis.
Endava plc (DAVA) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $772.3M | $772.3M | $885.7M | $1.02B | $1.17B | $1.34B | $1.53B |
| Gross Profit | $193.7M | $193.7M | $222.1M | $254.8M | $292.2M | $335.1M | $384.3M |
| Operating Income (EBIT) | $31.5M | $31.5M | $36.1M | $41.4M | $47.5M | $54.5M | $62.5M |
| Stock-Based Compensation (SBC) | $32.0M | $32.0M | $36.8M | $42.2M | $48.3M | $55.5M | $63.6M |
| Unlevered Free Cash Flow (FCF) | $48.1M | $48.0M | $55.1M | $63.2M | $72.5M | $83.1M | $95.3M |
| SBC-Adjusted True Cash Flow | $16.0M | $16.0M | $18.3M | $21.0M | $24.1M | $27.7M | $31.7M |
Software - Infrastructure Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = 6.7 + 0.05 × (Rule of 40) · R² = 12%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| Endava plc | DAVA | $2.78B | $772.3M | 25.1% | 6.2% | 20.9% | 4.2% | 3.8× |
| Block, Inc. | XYZ | $41.67B | $25.04B | 46.4% | 15.5% | 23.7% | 4.8% | 1.6× |
| CoreWeave, Inc. | CRWV | $35.80B | $1.92B | 74.2% | -80.0% | 0.0% | 1.6% | 23.5× |
| VeriSign, Inc. | VRSN | $22.52B | $1.56B | 87.7% | 56.1% | 61.5% | 3.9% | 15.5× |
| CORPAY, INC. | CPAY | $22.17B | $3.97B | 78.1% | 44.4% | 52.1% | 2.9% | 7.2× |
| NetApp, Inc. | NTAP | $21.02B | $7.39B | 70.6% | 22.3% | 24.6% | 5.4% | 3.0× |
| Joint Stock Co Kaspi.kz | KSPI | $11,481.85B | $2,520.93B | 62.3% | 19.3% | 59.8% | — | 4.4× |
| Peer Cohort Median Benchmark (N=6) | 72.4% | 20.8% | 38.4% | 3.9% | 5.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 3.8× | $2.90B | $2.78B | $47.55 | 0.0% |
| -20% Multiple Compression | 3.0× | $2.32B | $2.20B | $37.62 | -20.0% |
| -35% Multiple Compression | 2.4× | $1.89B | $1.76B | $30.18 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $3.86B | $3.74B | $63.97 | +33.1% |
Frequently Asked Questions: Endava plc (DAVA) Valuation
What is Endava plc (DAVA)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, Endava plc (DAVA) has a Base Case implied value of $16.42 per share (with a Bear Case of $6.77 and a Bull Case of $28.88), compared to its current price of $47.55. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is Endava plc (DAVA)'s Rule of 40 score and Free Cash Flow margin?
Endava plc achieves a Rule of 40 score of 20.9%, combining a 14.7% revenue growth run-rate with a 6.2% TTM free cash flow margin on $772.3M in trailing twelve-month revenue. In the Software - Infrastructure peer cohort, the median Rule of 40 benchmark is 38.4%.
What revenue growth rate is priced into DAVA stock according to Reverse-DCF analysis?
At $47.55 per share (Enterprise Value of $2.90B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 41.9%, compared to Endava plc's historical CAGR of 14.7%. Overall market expectations are rated as "Aggressive Growth Expectations Priced In".
What is Endava plc (DAVA)'s R&D Return Score and innovation productivity?
Endava plc (DAVA) recorded N/A in FY R&D expense (tracked from SEC filings) and $193.7M in FY gross profit. It is currently unranked on the letter-grade leaderboard (stale data).
How does Endava plc compare to Software - Infrastructure peers?
Endava plc (DAVA) earns an institutional Software Quality Score of 70/100 (Grade B+ — Quality Software Operator). Across its Software - Infrastructure peer group (XYZ, CRWV, VRSN, CPAY, NTAP), the cohort trades at a median EV/TTM Revenue multiple of 5.8× and a median gross margin of 72.4%.
How does Stock-Based Compensation (SBC) impact Endava plc (DAVA)'s valuation?
Endava plc recorded $32.0M in TTM stock-based compensation (4.1% of revenue). When treating SBC as a cash-equivalent compensation expense, Endava plc's SBC-adjusted free cash flow yield is 0.6%, scoring 25/25 on our Shareholder Dilution Friction pillar.