Endava (NYSE:DAVA) shares dropped at the open before retracing after it reported earnings for the fourth quarter.
Despite the initial fall, Endava's EPS of £0.57 was £0.12 better than the analyst estimate of £0.45, while revenue for the quarter came in at £189.8 million, up 5.2% YoY and above the consensus estimate of £188.53M.
DAVA shares are currently up 2.57% at $52.31 after opening the session down at $47.47 per share.
The London, UK-based company said demand from new and existing clients continued to drive revenue growth in the quarter.
"While we continue to see clients delay new projects due to the uncertain macroeconomic environment, we see high levels of sales activity as clients are once again prioritizing digital transformation projects," said John Cotterell, Endava's CEO.
Looking ahead, Endava sees Q1 2024 earnings between £0.34 and £0.35, while revenue for the period is expected to be from £186M to £187M.
For FY2024, EPS is seen from £1.52 to £1.62 on revenue of £780 to 795M.
Reacting to the report, TD Cowen analysts said the company's outlook was "significantly below," which explains the initial fall in DAVA shares.
"4Q fine, but DAVA's 1Q & FY24 outlooks start significantly below w/ revenue/EPS missing elevated consensus ests by -5%/-31% and -6/-29%, respectively. It cites improving bookings trends, but client delays persist on discretionary work & organic headcount down -8% q/q as group is clearly not out of the woods," said the analysts, who have an Outperform rating and $78 price target on the stock.
"Numbers get the reset that many have been waiting for," they added.