Endava plc (NYSE:DAVA) Q2 2023 Earnings Call Transcript

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John Cotterell: Yes. So it’s just one of the opportunities that we’re seeing with the market just being a little bit less pressured in terms of recruitment of talent actually focused on picking up some of those more senior and more experienced people that are fundamental for us in driving growth. And as — and it’s pretty much universal across the world probably happened earlier in more developed nations but has cascaded into all of our actual delivery locations as well, the pressure in the market, competitive pressure in the market has lightened up a bit and cut off. So as I mentioned, we’re recruiting senior people and laying attrition to just move the dial a little bit in terms of the seniority, it’s an organization that we have. We went through the same process in the early stages as COVID pullback. And you know that positioned us well to then be able to expand as demand came back in.

Maggie Nolan: And then any other changes in the attrition metrics or maybe some more information on how things like the mentor program you mentioned are impacting those?

John Cotterell: So our attrition is staying in about the same place. We’re at 12.5% last quarter. So 12.6% in the previous quarter, so very close to where we were before. And I think we’ll keep it in around that space going forward. And that will keep us balanced as a business in terms of responding to the demand pickup that we’ve articulated.

Operator: The next question comes from Jamie Friedman with Susquehanna.

Jamie Friedman: I know you’re getting a lot of questions about payments but I just want to clarify, isn’t it the TMT vertical that slowed more materially? And also, Mark, didn’t I hear you say — I think it was you speaking that it’s contemplated to be flat sequential?

Mark Thurston: Yes. So TMT was flat sequentially for us, Q1 to Q2. I think as I said earlier, North America, West Coast tech biting stronger. We anticipate we will actually see a further sort of sequential decline going from Q2 to Q3. So it will come off further which, again, is mainly driven in North America West Coast tech but we don’t see some uptick, a little bit moved compared with payments and financial services and other when we go into Q4, mainly driven by, we think, tech recovering basically and some activity in telco.

Jamie Friedman: Got it. I realize you don’t typically guide vertically but would you have the same perspective on the cadence for payments and other for the remainder of the year?

Mark Thurston: I think we will see a marginal decline quarter-on-quarter, probably about 1 percentage point or so as we go from Q2 to Q3, largely geo-driven with U.K. and North America but then seeing a pickup actually in Q4, again, pretty muted by our standards but we will see, I think, the recovery coming through in North America and some mild recovery in the U.K.

Jamie Friedman: And how about other?

Mark Thurston: Other, I think it’s — for us, it’s performing well. So 6% growth Q1, Q2, full geographies, I’d call out health has been particularly strong but most of the verticals are strong. A little bit of weakness in retail which we are seeing implying the guide as we go from Q2 into Q3. So I think it will still continue to grow but not at 6%, probably 3% but also, good momentum, a bit of a headwind in terms of retail, we think, as we go through but it’s a little bit of the edges and then continued progress the ability for us, particularly how performing particularly well at the moment.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to John Cotterell, CEO, for any closing remarks.

John Cotterell: So, thanks all for joining us today. I think you can see that digital transformation remains a priority for our clients and secular trends for our business remain strong and we look forward to speaking to you in a few months at our next earnings call.

Operator: The conference has concluded. Thank you for attending today’s presentation. You may now disconnect.

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