As an investment firm focused on technology services, Alten Capital monitors the progress of publicly traded digital engineering companies. We track EPAM (EPAM), Globant (GLOB), Endava (DAVA), Thoughtworks (TWKS), CI&T (CINT), Grid Dynamics (GDYN), and AgileThought (AGIL).
Endava was the last one reporting earnings this week. Below is a valuation and operating metrics update.
Even though we look at private markets, gaining insights into key public players is useful. A common theme we noticed during earnings calls was comments around AI and machine learning, given the quick advancements we have seen in generative AI and LLM technologies during the last months. The 2023 business slowdown is also clear when looking at this year’s growth goals and overall commentary.
In addition, we looked at valuation, growth, and profitability metrics. The size of each bubble in the chart below represents the respective enterprise value of each company. We can see the market expects CI&T to grow the highest, with Globant second even relative to its scale, whereas Thoughtworks is expected to grow the least this year. Globant stands out as the most expensive company, while AgileThought emerges as the least. If we drew a regression line, we would probably see a slight correlation between higher growth rates and multiples.
Looking at profitability now, the market sees AgileThought as having the lowest profitability, whereas Endava is expected to show the highest projected EBITDA margin for 2023. Notably, CI&T stands out as the least expensive from a profitability metric (and a relative growth metric). Globant maintains the highest relative valuation in both revenue and EBITDA metrics. To note, higher-scale companies have higher EBITDA multiples, as seen in the chart below. We would also see an upward-sloping regression line if we added it here.
Alten Capital actively engages in the technology services sector. We seek to establish connections with founders, management team members, and fellow investors in IT services. Please reach out to connect and explore how we can collaborate.