Good day and welcome to Endava’s third quarter of fiscal year 2025 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing star then zero on your telephone keypad. After today’s presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Ms. Laurence Madsen, Head of Investor Relations and ESG at Endava. Please go ahead.

Thank you. Good afternoon everyone and welcome to Endava’s third quarter of fiscal year 2025 conference call. As a reminder, this conference call is being recorded. Joining me today are John Cotterell, Endava’s Chief Executive Officer, and Mark Thurston, Endava’s Chief Financial Officer. Before we begin, a quick reminder to our listeners. Our presentation and accompanying remarks today include forward-looking statements, including but not limited to statements regarding our guidance for Q4 fiscal year 2025 and for the full fiscal year 2025, the impacts of headwinds facing our industry and business, our ability to capitalize on market opportunities and trends in our industry, including with respect to development of AI, our addressable market, our expectations regarding the share repurchase program, amendments to our technology and offerings, demand from clients for our technology services, our ability to create long term value for our clients, our people and our shareholders, and our business strategy, plans, operations, and growth opportunities. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements, and reported results should not be considered as an indication of future performance. Please note that the forward-looking statements made during this conference call speak only as of today’s date and we undertake no obligation to update them to reflect subsequent events or circumstances, other than to the extent required by law. For more information, please refer to the Risk Factors section of our annual report filed with the Securities and Exchange Commission on September 19, 2024 and in other filings that Endava makes from time to time with the SEC, including our current report on Form 6-K filed with the SEC on March 28, 2025. Also during the call, we will present both IFRS and non-IFRS financial measures. While we believe the non-IFRS financial measures provide useful information for investors, the presentation of this information is not intended to be considered in isolation or as a substitute for the financial information presented in accordance with IFRS. Reconciliations of such non-IFRS measures to the most directly comparable IFRS measure are included in today’s earnings press release, as well as the investor presentation, both of which you can find on our Investor Relations site or on the SEC website. A link to the replay of this call will also be available on our website. With that, I’ll turn the call over to John.

Thank you Laurence, and welcome everyone. We appreciate you joining us for our third quarter fiscal year 2025 earnings call. The business environment continues to evolve rapidly and the quarter just ended has been challenging. We are witnessing what I would characterize as inconsistent behavior from some clients, with their business priorities shifting rapidly. By that, I mean that clients’ desire to innovate remains strong; however, they are slow to sign large contracts in the current uncertain macroeconomic environment. Our slowing growth in the quarter was primarily driven by the weakening of the U.S. dollar at the end of the quarter and some deals that did not get signed in North America, and to a lesser extent in Asia Pacific. Mark will provide you with more details on our financial results shortly. Our pipeline of large opportunities continues to grow; however, with an increased level of global macroeconomic turbulence since our last earnings call, the pipeline is not converting into signed deals and thus into revenue at the rate we anticipated last quarter. In this uncertain environment, we are focusing on what we can control to best position the business for the long term. We continue to invest in the business while at the same time closely managing our expenses to protect our margins. We are also increasing our share buyback authorization by an additional $50 million, which we believe is the optimum capital allocation tool for us in the current environment. We also plan to accelerate the pace of partnership formalization to enhance our solutions and further strengthen our value proposition. These partnerships are already contributing to deal flow and delivering opportunities. Just a few weeks ago, we announced our pioneering involvement in Open AI’s exclusive beta services partner program. Together, we have already developed industry-first products and solutions for multiple joint clients. We’re extremely excited about this next step in our journey with Open AI. Last week, we announced that we are an implementation partner for Google Agent Space, a powerful platform that enables enterprises to embed intelligent proactive agents across their workflows. At its core, Agent Space offers a multimodal search agent that serves as a central conversational interface for accessing enterprise knowledge. With AlixPartners, a global consulting firm, we are excited to announce our strategic partnership building on over 15 years of successful collaboration across some of the most complex and high-impact digital transformation programs globally. This partnership is designed to address the full spectrum of client needs from strategic formulation and diagnostic assessment to technology design, implementation, and scaling. Our joint approach ensures that clients benefit not only from the high-level strategic insight but also from seamless execution that turns vision into tangible results, bridging the critical gap between strategic vision and technological realization. We’ve also partnered with SideFX, a leading developer of Houdini 3D procedural animation and visual effects software. The partnership combines our machine learning expertise and synthetic data with SideFX’s renowned VFX software suite for simulation and procedural content creation. This process is particularly crucial for fields where precision and realism are key to innovation, like manufacturing line inspection and autonomous vehicle training. We’ve built a strong partnership with Backbase, a leader in engagement banking, across both R&D and implementation streams. To date, we have jointly delivered digital banking solutions for seven banks, reinforcing Endava’s role as a trusted and capable implementation partner. Our work has helped transform retail banking services by delivering comprehensive digital capabilities ranging from web and mobile retail and corporate banking applications to digital lending solutions. AI remains a priority for many of our clients, and we continue to help them navigate their AI journeys. Let me take you through a few recent examples. In our ongoing collaboration with a leading global pharmaceutical company, our engagement has focused on refining their processes relating to regulatory clinical trial submissions, where precision, reliability, and speed are paramount. Facing the challenge of exceeding a rigorous accuracy benchmark measured against the output of a human clinical programmer, our team leveraged and advanced AI consensus mechanism enhanced by multi-shops training techniques, designed to evaluate and capture an extensive amount of data. I’m pleased to report that across two pivotal data sets, we exceeded the accuracy baseline by as much as 19%, at the same time reducing the time taken from hundreds of workdays to just a few hours. We believe this achievement embodies our AI-driven approach and underscores our ability to deliver trusted high-stakes outcomes in regulated environments. At one of the world’s leading insurance groups, we have recently collaborated with two operations teams to illustrate the transformative impact AI can have on their daily operations. Through a series of targeted training sessions, we demonstrated how precision prompt engineering can unlock new levels of productivity and innovation. The result was accelerated workflows, reduced operational friction, and a clear path forward for integrating AI at scale. The enthusiasm and commitment demonstrated by the teams underscore the tangible benefits of embracing AI, marking a critical step forward in their digital transformation journey. In our continued work with a premier golf performance brand, we are powering a strategic shift from B2B to B2C through AI-powered swing analysis and tailored coaching. We’ve built a cutting-edge video analysis platform capable of breaking down swing mechanics with precision. Using synthetic data and privacy-first design, our models detect biomechanical movement with remarkable accuracy, and we’re now advancing the analysis of intricate swing characteristics. For tailored coaching, we are developing an intelligent coaching agent, one that combines historical data with real-time analysis to deliver personalized improvement plans. This agentic solution adapts to individual goals and harnesses insights from our video analysis. What was once reserved for elite athletes is now scalable for a wider audience. Through this engagement, our dedicated product team has also worked closely with the client to refine the product strategy and overall consumer experience from app functionality to market positioning. Our recent engagement with a top-tier global services company showcased how generative AI can accelerate complex technical transformation. During a hackathon-style session, participants blended structure with speed while working in two agile teams. One team tackled the upgrade of a 37-module job application from Java 11 to 21, iterating AI-driven code improvements. The other team led a major migration over 1,000 entities into a modern data management framework using custom GPT workflows. Teams reported productivity gains of 50% to 300% and a strong appetite to deepen AI integration, which is exactly the kind of transformation we aim to capitalize on: hands-on, high-impact, and forward-looking. Now I’d like to provide you with an update on our recent successes in adding to our opportunity pipeline of larger and longer-term deals. On recent earnings calls, I’ve been highlighting the work we have been doing in securing these larger and longer-term deals. We consider these deals as being transformative for the relationships we build with our customers. Deals of this nature give us the ability to enter into true partnership discussions with our customers and to elevate us beyond the technology domain into being relevant to the senior C-suite. I’m now going to take you through a few examples of deals that we’re pursuing and have had recent successes with. In payments and banking, we’ve observed a key trend emerging around major banks looking to modernize and reinvent their payments business and capabilities. We’ve started working with a number of banks in Europe and the Middle East. Our heritage in this space enabled us to engage knowledgeably with these banks about modern technology platforms as a driver of their payments business strategy. We are being increasingly trusted to design, build, run, and evolve entire payment platform ecosystems. These deals are strategic and long-term in nature and require engagement with the senior leadership. They call on our industry expertise, our approach to core modernization, our delivery capabilities, and our ability to reimagine an AI-enabled future. In a number of our verticals, industry consolidation has led to overlapping ecosystems with multiple vendors, creating over-complexity, high maintenance costs, and delays in responding to market demands. We offer customers compelling insights to start addressing these challenges using our accelerators and tooling. We have recently engaged in discussions with a capital markets infrastructure company, a U.S. healthcare company, and a global financial services institution to help modernize their systems, and these deals are in our opportunity pipeline. We continue to support a leading fintech and payments provider in their strategic efforts to remediate technical debt and complete a major data center migration by fall 2025. Through our Ray and other accelerators, we are delivering an independent third-party perspective to help address resiliency risks and unlock opportunities to enhance application monitoring across the products and services they deliver to their customers. Some additional projects worth highlighting are the following. Our partnership with a leading financial institution in North America continues on a major core modernization initiative focused on reverse engineering and remediating three core banking platforms using our Maps and Dash solutions. This engagement highlights our automation capabilities and enables our client to modernize their platforms, eliminate technical debt, and introduce new features and enhanced performance. We are also expanding our presence in the U.S. healthcare sector with the addition of a new nationally recognized pharmacy benefit manager to our client roster. We launched a comprehensive benefit plan discovery phase using our Ray accelerator, paving the way for future initiatives to automate the creation and ongoing management of benefit plans. Now for an update on our people and innovation, our recent innovation lab, Global Final, held in Belgrade in March brought together top Endava talent from around the world to showcase AI-driven solutions addressing real client challenges. Out of the many impressive entries, eight finalist teams competed, with Australia taking first place for an edge AI solution transforming healthcare. Germany secured second for bridging AI with diverse systems, and North Macedonia came third for boosting digital accessibility through AI and open-source tools. Argentina’s team won the crowd’s heart with an AI-powered payment automation solution. Congratulations to all participants. Your innovation continues to drive Endava forward. As of quarter end, we were 11,365 Endavans strong, representing a 3.1% increase from the same period last year. We continue to prioritize recruitment in high-demand areas, including data, AI, and cloud to match the evolving needs of our clients. To all Endavans, thank you for your commitment and determination as we navigate the digital shift and discover the new opportunities that it brings. We remain focused on building sustainable growth, preserving our strong culture, and delivering solutions that help our clients not just adapt but lead. With that, I’ll hand over to Mark for a closer look at our quarterly financial results and guidance for the upcoming quarter and remainder of the fiscal year.

Thanks John. Endava’s revenue totaled £194.8 million for the three months ended March 31, 2025 compared to £174.4 million in the same period in the prior year, representing an 11.7% increase. In constant currency, our revenue increased 12.4% from the same period in the prior year. The lower revenue versus our guide is explained by the weakening of the dollar at the end of the quarter and some deals we expected to get signed in North America that didn’t, and to a lesser extent in Asia Pacific, whilst the U.K. and Europe performed as expected. Profit before tax for the three months ended March 31, 2025 was £13.6 million compared to a loss of £0.5 million in the same period in the prior year. Our adjusted PBT for the three months ended March 31, 2025 was £24.6 million compared to £15.5 million for the same period in the prior year. Our adjusted PBT margin was 12.6% for the three months ended March 31, 2025 compared to 8.9% for the same period in the prior year. Our adjusted diluted earnings per share was 34 pence for three months ended March 31, 2025, calculated on 59.4 million diluted shares, as compared to 22 pence for the same period in the prior year calculated on 58.8 million diluted shares. Our adjusted diluted earnings per share in Q3 was stronger than our guide for the quarter of 31 pence to 32 pence. We were able to offset the revenue miss with a strong cost control of adjusted SG&A. Additionally, the share buyback started last quarter had a minimal impact on adjusted EPS in the quarter. Revenue from our 10 largest clients accounted for 39% of revenue for the three months ended March 31, 2025 compared to 34% for the same period last fiscal year. The average spend per client from our 10 largest clients increased from £5.9 million to £7.5 million for the three months ended March 31, 2025 as compared to the three months ended March 31, 2024, representing a 28% year-over-year increase. In the three months ended March 31, 2025, North America accounted for 37% of revenue, Europe for 22%, the U.K. for 35%, while the rest of the world accounted for 6%. Revenue from North America grew 37.1% for the three months ended March 31, 2025 over the same period last fiscal year, due mainly to the contribution of Galaxy. Comparing the same periods, revenue from Europe declined 10.4%, the U.K. grew 13.2%, and the rest of the world declined 16.0%. Adjusted free cash flow was £17.5 million for the three months ended March 31, 2025 compared to £2.2 million during the same period last fiscal year. Our cash and cash equivalents at the end of the period totaled £68.3 million at March 31, 2025 compared to £62.4 million at June 30, 2024. Our borrowings totaled £136.5 million at March 31, 2025 compared to £144.8 million at June 30, 2024. Capital expenditures for the three months ended March 31, 2025 as a percentage of revenue was 0.6% compared to 0.8% in the same period last fiscal year. As an update on our share repurchase program, Endava has repurchased approximately 2 million ADS for $39.7 million as of April 30, 2025. As of April 30, 2025, $60.3 million remains for additional repurchases under the authorization. Additionally, as John mentioned earlier, the Board of Directors of Endava has approved an additional $50 million of repurchases under the existing share repurchase program. Before providing the guide, I’d like to provide some additional details. The U.S. dollar has continued to weaken since we closed Q3 and this is providing additional significant headwinds. On a sequential basis, in Q4 it is contributing a negative 3% impact on growth. In addition, in North America the conversion of deals and the opportunity pipeline into revenue continues to slow, reflecting a high level of client caution on spend, particularly in mobility and healthcare. Additionally, the rest of the world has slowed more than expected when we last guided. The U.K. also continues to face headwinds while Europe is performing as expected. Now moving onto our outlook, our guidance for Q4 fiscal year 2025 is as follows. Endava expects revenue to be in the range of £186 million to £188 million, representing constant currency revenue change of between -1.0% and 0% on a year-over-year basis. Endava expects adjusted diluted EPS to be in a range of 22 pence to 24 pence per share. Our guidance for the full year fiscal year 2025 is as follows. Endava expects revenue to be in the range of £771.5 million to £773.5 million, representing constant currency revenue increase of between 6.0% and 6.5% on a year-over-year basis. Endava expects adjusted diluted EPS to be in a range of 111 pence to 113 pence per share. Guidance for Q4 fiscal year 2025 and the full year fiscal 2025 assumes exchange rates on April 30, 2025, when the exchange rate was £1 to US $1.34 and €1.18. This concludes our prepared comments. Operator, we are now ready to open the lines for Q&A.

We will now begin the question and answer session. The first question comes from Bryan Bergin with TD Cowen. Please go ahead.

Hi guys. Thank you for taking the question here. John, I wanted to dig into some of the challenges here and wanted your perspective on whether any changes internally over the last couple of years, whether the acquisition of Galaxy or anything like that, has substantially compounded issues around execution while client demand has been more challenged. As we kind of step back and see some peers talking about more stability, what do you see as the biggest differences here?

Hi Bryan, thanks for your question. Our main focus right now is on finalizing some significant deals in our pipeline. These are crucial for us. We had anticipated closing around 10 of these major deals, but so far, we have closed five. There were a few reasons for this; two deals announced shortly after our last earnings call that they were entering discussions to go private, which caused them to defer finalizing the deals during that process. Another deal announced a major cost-cutting initiative and also postponed, while there were two other deals related to tariffs in the automotive sector that prioritized their supply chain over what we were discussing. None of these opportunities have disappeared, but they've been delayed due to these external factors. Regarding your question about whether our internal changes have made things worse, we actually haven't seen that. The internal adjustments we've made over the past two years have improved our client conversations. We're engaging at higher levels with more innovative projects, and this is a direct result of the changes we've implemented in technology, deal structuring, and our market approach. We do feel a bit of a lull now as we transition from digital transformation to an AI-driven digital shift, along with the deals that are associated with this transition. However, we believe we are positioning ourselves effectively. The pipeline shows promise, as we've increased the number of larger deals from 21 to 24, with nine new opportunities. We secured five deals and have one on hold, which accounts for the increase. We're focused on converting these deals into revenue to start seeing a rise in our earnings.

Okay, that’s very helpful detail. Thank you for that. I guess as you step back and navigate this more challenging operating backdrop, how do you think about the workforce - do you need to have additional optimization? Then from a forecasting standpoint too, does it require a change in the approach, just given the volatility in client behavior?

I’ll pick up on the workforce and I’ll let Mark talk about the forecasting guidance. On the workforce side, there is quite a big shift going on in the types of skills and types of work that we are doing. One extreme, things like testing are dropping quite sharply, a lot of AI automation coming into that and needing less people to do the same amount of work. On the other side, a big uptick coming in AI, data, and cloud in particular, and a lot of reskilling and a lot of the new people that are coming into the organization around those skills. That is also driving our attrition up a little bit at the moment as we make that shift from the older style skills that we had to the newer style, so a big shift going on there. It is one we are driving through - we’re not finding that we’re short of people or unable to staff businesses coming through, so we feel confident we’re making that shift well. Mark, do you want to talk about the forecast?

Yes. A significant thing has been dollar-GBP rates - I mean, since we guided mid-February, which was US $1.24, we’re guiding at $1.34, that’s an 8% shift. We haven’t really seen anything like this since Brexit, and that has taken off certainly for Q4 about $7 million of the previous guide alone, so it’s quite a significant shift from an FX perspective. In terms of the big deals and in terms of the guide, we have stripped them out because it’s very difficult to predict timing. That is another big shift. In terms of the guide that we have for Q4, there is very limited amount of pipeline in it. Certainly at the top of the guide, there’s something like 1% or so of the figure, and at the bottom of the guide, there is no basic pipeline in there, so we’ve taken what we believe is a very conservative view, given the ability to predict when these bigger deals are going to land is proving extremely difficult. I think also the other thing is there is still quite a bit of uncertainty, certainly in the U.S. where we have seen things slow. It’s difficult to pinpoint whether it is things such as talk around tariffs, but we’re certainly seeing automotive pull back and some of our logistics clients as well pull back, so we’ve been conservative with the outlook and we will remain conservative, I think as we go forward.

Okay, appreciate that. Thank you.

The next question comes from Tyler DuPont with Bank of America. Please go ahead.

Hi, good morning John and Mark. Thanks for taking our questions. I just wanted to start by asking if you can discuss some of the pricing conversations you’re currently having, given the macro environment has remained, let’s call it choppy. It seems like certain vendors and your peers are seeing relative stability, others competing a little bit more aggressively for work. When you are having conversations with your clients, are they discussing at all about any pricing dynamics worth mentioning, any concessions or anything like that, that Endava has been engaging with to try to secure wins or maintain the deals they have?

It's definitely competitive and it has become even more so. On average, we are managing to hold our day rates. We do negotiate deals to secure projects, particularly for larger contracts, where we create proposals that benefit both parties. While the pricing is competitive, the average revenue per head and the average workday rate have remained quite stable from Q2 to Q3, and we expect that trend to continue in our Q4 guidance. We've noticed that other companies are aggressively pursuing work, but we are maintaining profitability on the projects we win.

Great, that’s helpful. Then I wanted to just touch on growth by geography. For starters, maybe I missed it, what was the organic growth in North America, and then you mentioned you’ve seen continued softness in North America, and in Europe it seems like things are trending as expected, U.K. facing some incremental headwinds. Just wanted to gain a little bit of clarity on the types of projects that you’re seeing relative stability in versus those that are beginning to see incremental pressure, and just any sizing of that would be appreciated.

North America has shown that, when considering Q3 and the year-over-year comparison, it's not a favorable assessment because this year reflects the full impact of Galaxy compared to last year. The exchange rate has remained relatively stable sequentially. The significant changes manifest when comparing Q3 to Q4, and we had initially anticipated a reasonable sequential increase, but that expectation has changed. This does not imply that North America is experiencing a drastic decline. On a reported basis, growth may be slightly below current levels, but it would have been much stronger without the foreign exchange headwinds, which are around £5 million to £6 million. The challenges we're facing in North America are primarily driven by foreign exchange issues, but there has also been a slowdown in some of the larger deal conversions we were expecting, as John mentioned. Additionally, the performance has been inconsistent, especially in industry sectors like automotive, which falls within our mobility segment.

Just on the types of projects, the growth areas are the AI, data, cloud-based areas are where we’re seeing the greatest demand, greatest quick demand, if you like. The pipeline has a lot of core modernization demand and we are closing some of those, but we’re not closing them at the rate yet that we would like to see. The areas where we’re seeing clients turning things down or it being more competitive is the more commodity end, and obviously we’re driving away from the commodity end anyway in terms of our focus as a business. But things like application maintenance and so on, it’s not a huge part of our portfolio, but we are seeing clients going, is there a way of doing that cheaper.

Very helpful, thanks guys.

The next question comes from Harry Read with Redburn Atlantic. Please go ahead.

Hi, thanks for taking questions. Just wanted to ask on headcount, when I try to strip out Galaxy, I’ve got underlying headcount reducing by around high single digits. I was just curious how much of that is AI efficiency-driven and how much is a reflection of potentially a more muted demand forecast for the next quarter and then into FY26.

There is productivity coming through, and that’s partly what’s helping maintain the pricing that Mark was touching on earlier. There’s also a shift from the sort of lower value activities that I was talking about earlier, things like testing, towards higher value, and by higher value, I mean higher unit rates for things like data, AI and cloud, and so on. The revenue per head over and above that shift is staying roughly stable, so that explains the underlying drop in headcount versus the revenue.

Okay, great, and then maybe more of a housekeeping one, it looks like share-based comp as a percentage of sales has dropped versus the last couple of quarters. Do you think 3% is a sensible level to be modeling going forward?

Part of that is a fall away because of the performance - we are not going to meet the incentive targets for this year, and also as we’re looking at FY26, some of the awards which are multi-year are also falling out of the equation, so there’s a reverse of that. You’ve got a big reduction in quarter due to those two factors, so it’s not representative as a percentage of revenue going forward. I think a more realistic level is where we’ve usually guided, which is about 3% to 5% of revenue.

Okay, thank you. Then you mentioned testing on an area of efficiency gains. Are there any other areas that you have exposure to - one that comes to mind is BPO, or any other areas where you’re seeing AI automation driving some efficiencies?

We’re not in BPO - let’s be clear on that. AI driving efficiency applies to pretty much our whole business, so whether it’s requirements gathering, doing consulting, doing development and so on, we are applying AI to that to make our teams more productive, and actually I touched on quite a few on the call. We’re seeing quite good productivity gains coming through. A lot of clients take that and actually then add additional work, so we’re getting through their backlogs faster, so it’s not turning down the amount of work but it is making us more attractive from a delivery point of view to our clients because of the extra productivity that we have.

That’s great, thank you very much.

The next question comes from Jonathan Lee with Guggenheim. Please go ahead.

Great, good afternoon guys, and thanks for taking my questions. I appreciate the candor around the current air pocket dynamic you called out earlier, but with the time it takes to ramp core modernization deals once they’re signed, as well as the delays related to client decision-making you’re seeing today, what gives you confidence that maybe there isn’t risk of an extended revenue air pocket later this calendar year and potentially into next, driven by a potential lack of large deal momentum here?

I’ve aimed to provide a lot of detail about the deals we are working on during this call. It's essential for us to navigate out of this stagnant period and begin closing these deals, so we have shared more information about our current projects, their progress, and the reasons behind the slower closure rate, which I discussed earlier. We want to offer more insight than usual to help you understand what’s ahead. It’s a unique contrast for us; while it’s exciting to have many significant deals nearing completion, it’s also incredibly frustrating that we aren’t yet seeing the signed contracts that would lead to revenue growth. We are trying to give you more clarity on this, and I believe it will help us exit the current stagnant period sooner than previously anticipated.

Thanks for that color, John. Just one follow-up from me, given some of the ownership changes at one of your top customers, are you seeing any impact on spending or budget priorities there, and if so, how is that contemplated in your outlook?

We are not seeing any negative dynamics there, and we are seeing contracts continuing to sign, etc. There’s a lot of momentum on the programs that we’re working on.

Appreciate that, thank you.

The next question comes from Jamie Friedman with Susquehanna. Please go ahead.

John, I appreciate your commentary on the customers; it's very helpful. Regarding factors outside your control, like exchange rates, Mark, could you clarify the impact of exchange rates on different segments? For example, payments were down 13%. Is there a way to determine the constant currency effect on that? Also, I have a quick follow-up.

You’re talking about quarter-on-quarter? When you’re posing that question, you’re talking about Q4 or you’re talking about Q3?

It would be helpful if you could provide year-over-year comparisons. The expectations regarding performance suggested that some segments were stabilizing. If the reported numbers do not support that, could it be partly due to foreign exchange effects?

It is certainly contrary to our guidance. The foreign exchange impact was approximately £1.5 million, primarily affecting North America, but there was also some impact in the U.K. since some clients there are billed in U.S. dollars. The main sectors contributing to this shift compared to Q3 are banking and capital markets, as the pullback was primarily in the U.S. market. We also observed challenges in the healthcare sector due to our significant North American healthcare client. Overall, these two sectors are where we are facing headwinds from a foreign exchange perspective compared to Q3.

Okay. The top client, by my calculations, accounted for approximately 2% of revenue, which translates to around $4 million in revenue. Can you provide some background on that? I’m referring to Row 63 of your fact sheet.

Yes, so a good chunk of that is going to be FX.

Yes, okay. Got it.

There was also some follow-on work regarding the significant deals that were delayed, including a minor amount, but there was a postponement in some forward work that we anticipated would take place.

Okay, and then one last question about the total number of clients that are over a million. That number decreased by about six. It's difficult to quantify exactly because we don't know the starting point for clients over a million, but we do know where it ends. We’re not sure how significant these clients are. Can you share any insights on why you had six fewer clients exceeding £1 million?

Well, the greater than a million is on a rolling 12-month basis, so there’s an element of clients dropping out of a quarter 12 months ago and the additions this quarter, so you have that, so there’s a little bit of a backward-looking metric. The sort of movement in those five, we felt most of it has been in TMT, which is a segment that hasn’t grown particularly well for us in others. The rest of the sectors, like payments, BCM, insurance were basically stable.

Got it, thank you. I’ll jump back in the queue.

The next question comes from Phani Kanumuri with HSBC. Please go ahead.

Hi all, thanks for taking my questions. The first one is regarding utilization rates. What are your current utilization rates, and where do you expect it to trend during 4Q? The second one is regarding your guidance for EPS. What are the cost elements that are impacting your guidance for EPS? What is the gross margin that you’re looking at, and are there any measures to get the EPS back if the demand environment doesn’t improve?

Utilization in Q3 was reasonably good, around 72%. We expect it to remain at that level in Q4. Regarding the EPS for Q4, there was an implied guidance of around 35, but foreign exchange has had a significant negative effect, reducing it by approximately 6 pence. Additionally, we are experiencing revenue and gross margin compression, which further lowers the EPS. We have been able to mitigate some of this through G&A savings and contributions from the share buyback. For gross margin, going from Q3, which was about 33.5% on an adjusted basis, there's a benefit from the reversal of bonus accrual due to performance shortfalls, resulting in a normalized gross margin of about 32%. Our guidance implies that we will increase the margin by roughly half a percent through a combination of maintaining pricing and improving utilization. However, the significant drop to around 31% is mainly due to the foreign exchange impact on the dollar. In Q4, around 45% of our revenue will be affected, so a shift in the FX rate from 1.24 to 1.34 represents a substantial headwind and a revenue decrease of about 7 million that we noted in the guidance. The cost base is not heavily weighted in dollars, so this foreign exchange fluctuation significantly impacts our gross margin. To illustrate the sensitivity to the dollar, if it changes to 1.30, we could see a potential 1% movement in gross margin.

Okay, that’s helpful, Mark. One other question that I had was that you mentioned that you had some integration benefits from Galaxy that would start flowing through this quarter. Going forward, are all the integration benefits already factored in the guidance, and has all this been recorded in 3Q?

Most of the benefits that we were getting were in G&A, so we have obviously baked that in. As for the comments around Q3 EPS, we were able to absorb weakness in revenue and gross margin by savings on SG&A, so not only through the integration where it sort of goes, we’ve done it elsewhere. We are absorbing revenue shortfall and gross margin impact by those synergies that we’ve secured thus far. There is further to go, I think, looking forward into FY26 with further integration with Galaxy as we put together our global delivery model, but that will be coming through operational efficiency, if I can put it that way, through the gross margin rather than SG&A.

The next question comes from James Faucette with Morgan Stanley. Please go ahead.

Thank you so much, and appreciate all the color here. Wanted to ask a couple of questions related to types of engagement. First, any meaningful traction that you’re seeing around gen-AI and scaling of those from proof of concept and movement there as we think about that as a growth driver?

Yes, we are seeing a pick-up in that, but there’s also a shift, and we’re seeing more opportunities resulting from that shift, which is in the commercial world using agentic AI, which essentially is teams of AI agents. You can get much better quality output, much better reliability, much better accuracy, and you’re bringing more intelligence to bear, and actually we’re finding there’s more applications for that, that are really viable in the enterprise space. We’re seeing more pick-up into the larger project delivery activities that we’re doing, some of which I touched on in the opening remarks, than we are in just the pure gen-AI type solutions. It’s one of the areas where we’ve been working really well with Open AI and Google, hence the announcements about the partnerships and the leads that are coming through that. So yes, we are seeing real traction in that and move into larger scale engagements.

Interesting. As this is happening, how should we consider this in relation to work or bookings? I wonder if this will replace some of your usual work or if you view it as additive. Any insights on the size of this would be helpful. Thank you.

We actually see it as a digital shift, where the traditional digital work that we have been doing is shifting into an AI-enabled space, and so over the next couple of years, and over the last year or so, the shift of product work that we’ve been doing historically, that was very digital-oriented, in many sectors is shifting to be an AI-enabled product capability. Ultimately, we see the entire organization either in the functionality that is AI-enabled or in the way in which you deliver it being AI-enabled, and we are well into that shift now.

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

Thank you, and thank you all for joining us today. As I mentioned in my prepared remarks, the business environment continues to evolve rapidly. We are witnessing an increased level of global macroeconomic turbulence since our last earnings call, and while our opportunity pipeline continues to grow, it is not converting into signed deals and thus into revenue at the rate that we anticipated last quarter. As a result, we continue to have an elongated ideation to production cycle. In that environment, we are focusing on getting those deals closed and to control what we can to best position the business for the long term. I look forward to speaking to you all on our next earnings call in September. Thank you.

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