Endava plc (DAVA): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at Endava plc (DAVA) right now, and honestly, the market picture shows a company navigating serious headwinds where client spending is definitely cautious, making the fight for every contract incredibly fierce. With specialized talent being hard to hold onto and your top 10 customers driving a huge $\mathbf{36\%}$ of $\text{FY2025}$ revenue, the pressure from both suppliers and customers is intense, which is reflected in the meager $\mathbf{1.1\%}$ revenue growth forecast for $\text{FY2026}$ against a $\mathbf{10\%}$ industry average. This intense competitive rivalry is squeezing the adjusted profit before tax margin down to just $\mathbf{10.6\%}$ of revenue in $\text{FY2025}$, so let's break down exactly where the leverage lies across all five of Porter's forces to see the real risks and opportunities facing Endava plc (DAVA) today.

Endava plc (DAVA) - Porter's Five Forces: Bargaining power of suppliers

You're looking at Endava plc's supplier power, and honestly, for a services firm, the biggest suppliers aren't raw materials; they are the people and the platforms they need to deliver. Right now, the bargaining power of suppliers for Endava plc is leaning toward the higher side, primarily driven by the intense competition for specialized human capital.

The core of this pressure comes from the demand for niche expertise, especially in AI and Cloud engineering. Endava plc is actively pivoting, noting that over half of its people now use AI in projects, signaling a massive internal shift toward these high-demand skills. This focus means the talent pool capable of delivering on these projects is both smaller and more expensive to secure and retain. Here's the quick math: general IT wages in the US were anticipated to rise 3.3% at the median in 2025, but specialized roles in AI/Machine Learning saw starting salaries increase by 44% in some surveys, which definitely puts upward pressure on Endava plc's largest input cost-labor.

The talent supplier base is highly fragmented but extremely mobile. Specialized talent can easily move to competitors or even client in-house teams, which keeps Endava plc on its toes regarding compensation and retention strategies. We saw the total headcount at June 30, 2025, settle at 11,479, down from 12,085 a year prior, which suggests either attrition or a strategic realignment, but the underlying demand for high-skill personnel remains acute.

The supplier power isn't just about people, though. Key technology partners hold significant leverage over platform access, which is critical for an AI-native strategy. Endava plc has publicly confirmed its partnership with OpenAI, which has led to joint client projects, including the rollout of OpenAI Enterprise GPT for a financial compliance technology provider. This reliance on proprietary, leading-edge platforms means Endava plc must adhere to the terms and pricing set by these foundational technology providers to maintain its competitive edge.

We can map out the key supplier dynamics like this:

The power of these suppliers is further evidenced by the strategic nature of Endava plc's other relationships, which often involve deep integration:

• Renewal of long-term partnership with MSPS Groep to power healthcare administration services.
• Strategic partnership with global consulting firm AlixPartners to deliver end-to-end technology solutions.
• Confirmed joint projects leveraging OpenAI technology with clients.

If onboarding takes 14+ days, churn risk rises.

Finance: draft 13-week cash view by Friday.

Endava plc (DAVA) - Porter's Five Forces: Bargaining power of customers

The bargaining power of customers for Endava plc is significant, driven by concentration among the largest clients and the prevailing market sentiment regarding IT spending.

High power, as 36% of $\text{FY2025}$ revenue came from the top 10 clients. This concentration means that losing even one major account would have a material impact on Endava plc's top line.

Clients are recalibrating and delaying large spending decisions due to market volatility. Endava plc's CEO noted that the short-term operating backdrop remains volatile and many clients continue to recalibrate the timing of spending, leading to a cautious outlook for the near term.

Low switching costs for general IT services, but high for deep, long-term digital transformation. This creates a bifurcated power dynamic; for commoditized work, clients can easily shift providers, but for deeply embedded, multi-year transformation programs, the inertia is much higher.

Clients are pushing for lower pricing, keeping the market competitive. This pressure is inherent in the services industry, especially when clients are scrutinizing budgets and delaying non-essential spend.

Endava plc's client count over $\text{£1 million}$ dropped to 133 at $\text{FY2025}$ end, down from 146 clients at June 30, 2024.

Here's a quick look at client concentration metrics across recent periods:

You can see the concentration shifting slightly quarter-to-quarter, but the overall reliance on the top tier remains a key factor in customer power.

Key financial and statistical indicators related to customer base strength:

• $\text{FY2025}$ Revenue: £772.3 million.
• $\text{FY2025}$ Revenue from Top 10 Clients: 36%.
• Client Count over $\text{£1 million}$ (June 30, 2025): 133.
• Client Count over $\text{£1 million}$ (June 30, 2024): 146.
• $\text{FY2025}$ Revenue Increase Year-on-Year: 4.3%.

If onboarding for new, smaller clients takes longer than expected, churn risk rises.

Finance: draft 13-week cash view by Friday.

Endava plc (DAVA) - Porter's Five Forces: Competitive rivalry

You're looking at the competitive intensity in the IT services space right now, and honestly, it's fierce. The pressure on Endava plc is definitely showing up in its near-term growth expectations compared to the broader market.

Competitive rivalry is extremely high, evidenced by Endava's $\text{FY2026}$ revenue growth forecast of $\mathbf{1.1\%}$ versus a $\mathbf{10\%}$ industry average forecast. This gap suggests that while the market is still growing, Endava is expected to capture a much smaller slice of that growth pie, which is a clear signal of competitive strain. We see this dynamic playing out in the numbers when you compare analyst consensus for the coming year:

Direct competition comes from all sides. You have the large global consultancies, which have massive scale and deep pockets, going head-to-head with smaller, specialized digital firms that are often hyper-focused on a specific niche technology. Endava's own list of competitors includes companies like PagerDuty, Coursera, and Magic Software Enterprises, all vying for the same client spend in the broader computer and technology sector.

Pricing remains competitive, which is directly pressuring profitability. This is visible in the full-year $\text{FY2025}$ results, where the adjusted profit before tax margin settled at $\mathbf{10.6\%}$ of revenue, down from $\mathbf{11.2\%}$ in the prior year. That margin compression tells you that to win or keep business, Endava has to keep its pricing sharp, even as operational costs shift.

The fight for new contracts is intensified by slow deal conversions and palpable client caution. As CEO John Cotterell noted following the Q4 $\text{FY2025}$ results, the short-term operating backdrop remains volatile, and many clients are recalibrating the timing of their spending. This materialized in the Q1 $\text{FY2026}$ results, which were impacted by 'certain non large strategic pipeline opportunities that did not convert into revenue during the quarter as anticipated'.

The shift to $\text{AI}$-native services is the key battleground for differentiation. Endava is actively pushing its 'AI-native approach,' stating that over half of its people now use $\text{AI}$ in projects as a clear marker of progress toward this goal. In the wider market, companies with expertise in Generative $\text{AI}$ and Large Language Models ($\text{LLMs}$) are prime acquisition targets, meaning differentiation through $\text{AI}$ capability is not just a marketing point; it's a requirement for survival and growth.

You can see the competitive pressure reflected in client relationships too. Endava ended Q1 $\text{FY2026}$ with $\mathbf{133}$ clients generating over $\text{£1}$ million in rolling twelve-month revenue, a drop from $\mathbf{147}$ clients at the same point in $\text{FY2024}$. Losing those higher-value client relationships is a direct consequence of this intense rivalry.

Finance: draft $\text{13}$-week cash view by Friday.

Endava plc (DAVA) - Porter's Five Forces: Threat of substitutes

You're looking at the competitive landscape for Endava plc (DAVA) as of late 2025, and the threat of substitutes is definitely sharpening. This isn't just about another IT firm; it's about clients doing the work themselves or using new, cheaper, automated methods. Honestly, the pace of change here is what's driving the caution we saw in the latest guidance.

High threat from clients' increasing in-house AI and engineering capabilities.

Clients aren't just sitting still while we transform; they are adopting the same tools. Endava plc itself passed a key internal milestone, with over 50% of its people now using AI in projects, signaling a major internal shift. This means clients are seeing what's possible internally. To put this in perspective for the broader market, 92% of Fortune 500 companies are reportedly using OpenAI technology. This internal capability development directly pressures the need for external, non-differentiated services. The market reaction to this environment was clear: analyst forecasts for Endava plc's 2026 revenue were revised down to UK£790.6m, a noticeable drop from prior estimates of UK£840.1m.

Rapid evolution of Generative AI tools automates some traditional coding and testing work.

The tools themselves are becoming the substitute for human hours in routine tasks. We see concrete productivity gains reported industry-wide. For instance, programmers using AI tools have been reported to code 126% more projects per week. Early deployments suggest Generative AI can reduce software development time by up to 55%. Furthermore, early adopters of Gen AI are seeing average productivity improvements of 22.6% and cost savings around 15.2%. When a client can achieve these efficiencies in-house or via a cheaper tool, the value proposition for Endava plc's traditional service lines erodes quickly. The overall Gen AI market spending projection for 2025 was massive, expected to hit $644 billion globally.

Clients can substitute large projects with smaller, focused AI-led engagements.

The nature of the work is changing, which means project substitution is happening at the scope level. Instead of a multi-year digital transformation, clients might opt for a targeted AI proof-of-concept. This shift is reflected in Endava plc's client concentration; the Top 10 clients accounted for 37% of Q4 FY2025 revenue. If one of those large clients decides to insource a significant portion of their roadmap due to AI maturity, the impact is substantial. Management noted that clients continue to recalibrate the timing of spending, which points directly to this substitution risk.

Low-cost offshore providers offer a viable substitute for non-specialized services.

For the remaining non-specialized work, the pressure from lower-cost offshore competitors remains a baseline threat. We see this competitive pressure reflected in Endava plc's relative growth expectations. Analysts forecast Endava plc's revenue to grow at an annualized rate of just 1.1% through 2026, which is significantly slower than the 10% annual growth forecast for other companies in the industry. This gap suggests that Endava plc is losing ground or is being forced to compete aggressively on price for less complex work, likely against lower-cost alternatives. The company's total FY2025 revenue was £772.3 million, and the headcount stood at 11,479 at June 30, 2025, showing the scale at which these competitive forces are playing out.

The pressure is multifaceted: clients are building internal muscle, the tools are automating the work, and the remaining work is contested by lower-cost providers. Finance: review the Q1 2026 budget to model a 1.1% revenue growth scenario against the 10% industry average for non-specialized services by next Tuesday.

Endava plc (DAVA) - Porter's Five Forces: Threat of new entrants

You're looking at how easily a new competitor could jump into the digital transformation services market and challenge Endava plc. Honestly, while the physical setup cost isn't the main hurdle, the barrier built from human capital and deep client trust is significant.

The need for deep, specialized industry expertise creates a moderate to high barrier. New entrants can't just hire general coders; they need people who understand complex, regulated sectors. Look at Endava plc's focus areas:

• Payments accounted for 17% of revenue in Q4 FY2025.
• BCM (Business Continuity Management) accounted for 22% of revenue in Q4 FY2025.
• Insurance represented 10% of Q4 FY2025 revenue.

Breaking into these verticals requires years of domain knowledge, which is tough for a startup to acquire quickly. It's about credibility as much as capability.

The sheer scale of the required talent pool acts as a massive deterrent. Building a global delivery capability takes time and capital. As of June 30, 2025, Endava plc maintained a headcount of 11,479 people. That's a global talent pool that takes significant time and operational expertise to assemble and manage effectively.

New entrants would struggle immensely to replicate Endava plc's established strategic partnerships. These alliances act as a moat, providing access to specialized technology stacks and client pipelines. For instance, Endava plc has renewed long-term partnerships, such as with MSPS Groep, and has formed strategic alliances with firms like AlixPartners to deliver end-to-end solutions, and with Mambu for cloud banking technology.

Here's a quick look at the scale of Endava plc's operations as of the fiscal year ended June 30, 2025 (FY2025):

The data suggests the physical barrier to entry is relatively low. Capital expenditure (CAPEX) as a percentage of Current Assets for the fiscal period ending June 2025 was only 0.61%. This low capital intensity means a new firm doesn't need massive factories or hardware investments to start offering services. The real cost is in acquiring and retaining the specialized human capital, which is the dominant barrier here.

The difficulty for a newcomer is not just matching the 11,479 people, but matching the proven track record across key verticals and the deep, embedded relationships. If onboarding takes 14+ days, churn risk rises, which is a lesson new entrants will learn the hard way.

Finance: draft 13-week cash view by Friday.