- First quarter revenues of $248.6 million
- Raises full year revenue guidance and reiterates full year
Adjusted EBITDA Margin guidance
- Provides guidance for second quarter of 2024
Thoughtworks Holding, Inc. (NASDAQ: TWKS) ("Thoughtworks" or the
"Company"), a leading global technology consultancy, today reported
results for the first quarter of 2024 and provided an updated
financial outlook for the full year and second quarter of 2024.
Guo Xiao, Thoughtworks' Chief Executive Officer, said, “I would
like to thank Thoughtworkers worldwide who work tirelessly to
deliver extraordinary impact for our clients.
We delivered revenues of $248.6 million in the first quarter,
which exceeded our revenue expectations. Our ongoing restructuring
program is focused on driving efficiencies, and we are committed to
achieving our 2024 margin profile as we continue to execute on our
plan. We expect to return to sequential quarter-over-quarter
revenue growth in the second quarter of 2024.
While the macroeconomic environment continues to be challenging,
we are seeing signs of stability in our business. Bookings in the
first quarter were strong and we contracted with 49 new clients. We
continue to see high client interest in our AI services portfolio.
We have also seen market traction around Data Mesh and our DAMO™
managed services.
Our thought leadership and employee base of outstanding
technologists position us to help our clients harness the power of
cloud, data and AI to achieve future success.”
Update on Restructuring Activities
On August 8, 2023, Thoughtworks initiated several measures to
reduce operational costs and better align our business with our
customers’ needs in a challenging macroeconomic environment.
During the first quarter of 2024, Thoughtworks incurred pre-tax
cash charges of approximately $2.1 million, which include $1.0
million in wage-related costs and $1.1 million in non-wage related
costs. Since the program’s inception in August 2023 through March
31, 2024, we have incurred pre-tax cash charges of approximately
$21.1 million, which include $18.3 million in wage-related costs
and $2.8 million in non-wage related costs, and have achieved $87
million of annualized savings, which is above our targeted range of
$75 million to $85 million.
We are continuing to execute on our plan, and we remain focused
on driving additional savings. As we have undergone the process of
improving our cost profile, we have identified additional
opportunities to drive further cost savings.
As a result, Thoughtworks is increasing its restructuring
program to capture additional savings of $25 million to $30
million, for a total restructuring program savings of $100 million
to $115 million. We still expect the restructuring program to be
completed by the end of the third quarter of 2024.
Thoughtworks expects to incur additional pre-tax cash charges of
approximately $6.5 million to $8.0 million, for total expected
pre-tax charges of approximately $26.5 million to $33.0 million
(the “Updated Total Charges”). The Updated Total Charges include
$22.5 million to $27.5 million in wage-related expenses, such as
employee severance and related benefits, and $4.0 million to $5.5
million in non-wage related expenses, including costs related to
reducing leased office space, vendor contract cancellations and
professional fees.
QTD first quarter 2024 highlights
Revenues for the first quarter were $248.6 million, a
year-over-year decline of (19.0)%, or a year-over-year decline of
(18.7)% in constant currency. Acquisitions completed in the last
twelve months had an immaterial contribution to revenue growth in
the quarter.
Net loss margin for the first quarter was (12.4)% compared to
(2.6)% for the first quarter of 2023. Adjusted EBITDA Margin for
the first quarter was 2.7% compared to 11.4% for the first quarter
of 2023.
Diluted loss per share for the first quarter was $(0.10)
compared to $(0.03) for the first quarter of 2023. Adjusted diluted
loss per share for the first quarter was $(0.02) compared to
Adjusted Diluted EPS of $0.03 for the first quarter of 2023.
QTD first quarter 2024 summary
Three Months Ended March
31,
$ in millions, except per share data
2024
2023
Change
% Change(1)
GAAP Metrics:
Revenues(2)
$
248.6
$
307.1
$
(58.5
)
(19.0
)%
Gross Profit
$
69.8
$
97.5
$
(27.7
)
(28.4
)%
Gross Margin
28.1
%
31.8
%
(3.7
)%
SG&A
$
76.2
$
86.3
$
(10.1
)
(11.7
)%
SG&A Margin
30.7
%
28.1
%
2.6
%
Stock-based compensation
$
10.6
$
17.7
$
(7.1
)
(40.1
)%
Net loss
$
(30.9
)
$
(8.1
)
$
(22.8
)
Net loss margin
(12.4
)%
(2.6
)%
(9.8
)%
Diluted loss per share
$
(0.10
)
$
(0.03
)
$
(0.07
)
Cash flow from operations
$
(15.8
)
$
33.0
$
(48.8
)
Non-GAAP Metrics(3):
Revenue Growth Rate at constant
currency(4)
(18.7
)%
(0.9
)%
Adjusted Gross Profit
$
77.1
$
111.8
$
(34.7
)
(31.0
)%
Adjusted Gross Margin
31.0
%
36.4
%
(5.4
)%
Adjusted SG&A
$
70.3
$
77.2
$
(6.9
)
(8.9
)%
Adjusted SG&A Margin
28.3
%
25.1
%
3.2
%
Adjusted Net (Loss) Income
$
(7.4
)
$
10.1
$
(17.5
)
Adjusted EBITDA
$
6.8
$
34.9
$
(28.1
)
(80.5
)%
Adjusted EBITDA Margin
2.7
%
11.4
%
(8.7
)%
Adjusted Diluted (Loss) Earnings Per
Share
$
(0.02
)
$
0.03
$
(0.05
)
Free Cash Flow
$
(20.0
)
$
31.4
$
(51.4
)
(1) Percentage change for net loss,
diluted loss per share, cash flow from operations, adjusted net
(loss) income, adjusted diluted (loss) earnings per share and free
cash flow were excluded as they were determined to be not
meaningful due to a loss or negative position in one or both
periods.
(2) Acquisitions completed in the last
twelve months had an immaterial contribution to revenue growth for
the quarter.
(3) See “Non-GAAP financial measures” for
how we define these measures and the financial tables that
accompany this release for reconciliation of these measures to the
closest comparable GAAP measures.
(4) Revenue Growth Rate at Constant
Currency is calculated by translating the current period revenues
into U.S. dollars at the weighted average exchange rates of the
prior period of comparison; therefore the weighted average rates
used in each respective calculation are not consistent. The change
in revenue growth rate at constant currency was excluded, as it was
determined to be not meaningful.
Bookings
Our overall bookings for the trailing twelve months ended March
31, 2024 was $1.2 billion, stable sequentially and a year-over-year
decrease from $1.5 billion. The sequential stability from the
fourth quarter of 2023 to the first quarter of 2024 is a result of
strong bookings in the first quarter of 2024 as our industry-based
go-to-market strategy is gaining momentum. The 20.0% year-over-year
decrease in bookings is primarily a result of reduced client
budgets reflecting caution around the macroeconomic environment and
smaller contract sizes which reflect a shift to offshore services,
where bill rates are lower compared to onshore work, and, in
certain cases, discounts or pricing adjustments.
Trailing Twelve Months Ended
March 31,
$ in millions
2024
2023
# of clients with bookings greater than
$10 million
32
38
# of clients with bookings between $5
million and $10 million
25
32
Revenue by geography(5)
Three Months Ended March
31,
$ in thousands
2024
2023
% Change
North America
$
88,800
$
115,060
(22.8)%
APAC
86,713
97,484
(11.0)%
Europe
62,212
78,784
(21.0)%
LATAM
10,868
15,728
(30.9)%
Total revenues
$
248,593
$
307,056
(19.0)%
(5) Revenues are presented geographically,
by customer location. During the first quarter of 2024, in
connection with the restructuring, the Company updated the
disaggregation of revenue by customer location to reflect the
geographical market based on contracting location, consistent with
client ownership within our geographical markets, versus billing
location, as previously reported. All corresponding disclosures and
historical amounts have been recast to reflect the change.
Revenue by industry vertical
Three Months Ended March
31,
$ in thousands
2024
2023
% Change
Technology and business services
$
65,369
$
74,133
(11.8)%
Energy, public and health services
63,022
84,039
(25.0)%
Retail and consumer
38,931
47,912
(18.7)%
Financial services and insurance
39,155
55,155
(29.0)%
Automotive, travel and transportation
42,116
45,817
(8.1)%
Total revenues
$
248,593
$
307,056
(19.0)%
Liquidity
We had cash and cash equivalents of $72.6 million as of March
31, 2024, along with $300.0 million of borrowing capacity under our
revolving credit line, which was undrawn as of March 31, 2024. Our
total debt outstanding, gross of deferred financing fees, was
$293.6 million at March 31, 2024.
Financial outlook
Thoughtworks provides the following outlook for the second
quarter and full year 2024:
Second quarter
Thoughtworks expects the following for the second quarter:
- Revenues in the range of $250 million to $255 million,
reflecting year-over-year decline of (13)% to (11)% in U.S. dollars
and in constant currency, which includes an immaterial contribution
from acquisitions;
- Adjusted EBITDA Margin(6) in the range of 5.5% to 7.5%;
and
- Adjusted Diluted (Loss) Earnings Per Share(6) in the range of
$(0.01) to $0.01, assuming a weighted average of 323 million
diluted outstanding shares.
Full year
Thoughtworks now expects the following for the full year:
- Revenues in the range of $995 million to $1,020 million,
reflecting year-over-year decline of (12)% to (9)%, or (12)% to
(10)% in constant currency, which includes an immaterial
contribution from acquisitions;
- Adjusted EBITDA Margin(6) in the range of 8.0% to 10.0%;
- Adjusted Diluted EPS(6) in the range of $0.02 to $0.08,
assuming a weighted average of 330 million diluted outstanding
shares; and
- Stock-based compensation expense of $42 million.
(6) Excludes restructuring charges.
Conference call information
Thoughtworks will host a conference call and webcast at 8:00
a.m. Eastern Time on Tuesday, May 7, 2024, to discuss our financial
results. To access the conference call and webcast and the
accompanying slide presentation, which has additional information
regarding Thoughtworks' operating results, you can visit our
investor relations website at https://investors.thoughtworks.com. A
replay of the webcast will be made available on our investor
relations website at https://investors.thoughtworks.com.
Information on Thoughtworks' website is not part of this press
release.
-###- <TWKS915>
About Thoughtworks
Thoughtworks is a global technology consultancy that integrates
strategy, design and engineering to drive digital innovation. We
are over 10,500 Thoughtworkers strong across 47 offices in 19
countries. For 30+ years, we've delivered extraordinary impact
together with our clients by helping them solve complex business
problems with technology as the differentiator.
Thoughtworks uses and intends to continue to use our investor
relations website at https://investors.thoughtworks.com and social
media, @thoughtworks on Twitter and LinkedIn, as a means of
publicly disclosing material information and for complying with our
disclosure obligations under Regulation Fair Disclosure. Investors
should monitor these channels in addition to following the
Company’s press releases, SEC filings, public conference calls and
webcasts.
Forward-looking statements
This press release includes "forward-looking statements" within
the meaning of the "safe harbor" provisions of the United States
Private Securities Litigation Reform Act of 1995. In some cases,
you can identify these forward-looking statements by the use of
terms such as "expect," "will," "continue," or similar expressions,
and variations or negatives of these words, but the absence of
these words does not mean that a statement is not forward-looking.
Forward-looking statements represent our management's beliefs and
assumptions only as of the date of this press release. You should
read this press release with the understanding that our actual
future results may be materially different from what we expect. All
statements other than statements of historical fact are statements
that could be deemed forward-looking statements, which include but
are not limited to: the statements under "Financial outlook,"
including expectations relating to revenues and other financial or
business metrics; the statements under “Update on Restructuring
Activities,” including expectations relating to the size of the
restructuring actions, the amount and timing of related cost
savings and charges and the potential long-term benefits of the
restructuring actions; statements regarding relationships with
existing and potential clients and their engagement decisions; and
any other statements of expectation or belief. These statements are
subject to known and unknown risks, uncertainties and other factors
that may cause our actual results, levels of activity, performance
or achievements to differ materially from results expressed or
implied in this press release. Such risk factors include, but are
not limited to, those related to: current and future impact of
macro-related factors on Thoughtworks' clients’ engagement
decisions, Thoughtworks’ business and industry; the effects of
competition on the future business of Thoughtworks; uncertainty
regarding the demand for and market utilization of our services;
the ability to implement our restructuring actions, including the
costs of such actions and the uncertainty of the impact of such
actions on financial performance; the ability to maintain or
acquire new client relationships; other general business and
economic conditions (including such conditions related to inflation
and foreign currency exchange rates); and our ability to
successfully execute our strategy and strategic plans. For
additional information concerning these and other risks and
uncertainties, please see Thoughtworks' latest Annual Report on
Form 10-K, latest Quarterly Report on Form 10-Q, and other filings
and reports that Thoughtworks may file from time to time. Except as
required by law, Thoughtworks assumes no obligation, and does not
intend, to update these forward-looking statements, or to update
the reasons actual results could differ materially from those
anticipated in these forward-looking statements, even if new
information becomes available in the future.
Non-GAAP financial measures
Certain financial metrics contained in this press release are
considered non-GAAP financial measures. Definitions of and the
related reconciliations for these non-GAAP financial measures can
be found below. We use these non-GAAP measures in conjunction with
traditional GAAP measures to evaluate our financial performance. We
believe that these non-GAAP measures provide our management and
investors consistency and comparability with our past financial
performance and facilitate period-to-period comparisons of
operations. However, non-GAAP measures have limitations as
analytical tools, and you should not consider these measures in
isolation or as substitutes for analysis of our financial results
as reported under GAAP. For example, many of the non-GAAP financial
measures used herein exclude stock-based compensation expense,
which has recently been, and will continue to be for the
foreseeable future, a significant recurring non-cash expense for
our business and an important part of our compensation
strategy.
Certain non-GAAP measures related to our financial outlook
included in this press release and the associated webcast were not
reconciled to the comparable GAAP financial measures because the
GAAP measures are not assessable on a forward-looking basis. The
Company is unable to reconcile these forward-looking non-GAAP
financial measures to the most directly comparable GAAP measures
without unreasonable efforts because the Company is currently
unable to predict with a reasonable degree of certainty the type
and extent of certain items that would be expected to impact GAAP
measures for these periods but would not impact the non-GAAP
measures. Such items may include stock-based compensation,
acquisitions, income tax effects of adjustments and other items.
The unavailable information could have a significant impact on the
Company's GAAP financial results. Based on the foregoing, the
Company believes that providing estimates of the amounts that would
be required to reconcile the range of the non-GAAP measures to
forecasted GAAP measures would imply a degree of precision that
would be confusing or misleading to investors for the reasons
identified above.
Revenue Growth Rate and Revenue Growth Rate at constant
currency
Certain of our subsidiaries use functional currencies other than
the U.S. dollar and the translation of these foreign currency
amounts into U.S. dollars can impact the comparability of our
revenues between periods. Accordingly, we use Revenue Growth Rate
at constant currency as an important indicator of our underlying
performance. Revenue Growth Rate at constant currency is calculated
by applying the average exchange rates in effect during the earlier
comparative fiscal period to the later fiscal period.
Adjusted Gross Profit and Adjusted Gross Margin
We define gross profit as total revenues less cost of revenues.
We define Adjusted Gross Profit as gross profit excluding
stock-based compensation expense, employer payroll related expense
on employee equity incentive plan and depreciation expense. We
calculate Adjusted Gross Margin by dividing Adjusted Gross Profit
by total revenues. Our management uses Adjusted Gross Profit to
assess overall performance and profitability, without regard to the
aforementioned adjustments, which are unrelated to our ongoing
revenue-generating operations. We also believe this information
will be useful for investors to facilitate comparisons of our
operating performance and better identify trends in our
business.
Adjusted SG&A and Adjusted SG&A Margin
We define Adjusted SG&A as selling, general and
administrative expense excluding stock-based compensation expense,
acquisition costs, certain professional fees that are considered
unrelated to our ongoing revenue-generating operations and employer
payroll related expense on employee equity incentive plan. We
calculate Adjusted SG&A Margin by dividing Adjusted SG&A by
total revenues.
Our management uses Adjusted SG&A and Adjusted SG&A
Margin to assess our overall performance, without regard to items
such as stock-based compensation expense and other items that are
considered to be unique or non-recurring in nature or otherwise
unrelated to our ongoing revenue-generating operations. We also
believe this information will be useful for investors to facilitate
comparisons of our operating performance and better identify trends
in our business.
Adjusted Net (Loss) Income and Adjusted Diluted (Loss)
Earnings Per Share
We define Adjusted Net (Loss) Income as net loss adjusted for
unrealized loss (gain) on foreign currency exchange, stock-based
compensation expense, amortization of acquisition-related
intangibles, acquisition costs, certain professional fees that are
considered unrelated to our ongoing revenue-generating operations,
employer payroll related expense on employee equity incentive plan,
restructuring charges and income tax effects of adjustments.
We define Adjusted Diluted (Loss) Earnings Per Share as diluted
(loss) earnings per share, with the numerator adjusted for the
aforementioned adjustments to Adjusted Net (Loss) Income. In other
words, the numerator for Adjusted Diluted (Loss) Earnings Per Share
utilizes Adjusted Net (Loss) Income. We calculate Adjusted Diluted
(Loss) Earnings Per Share by dividing Adjusted Net (Loss) Income by
diluted weighted average shares outstanding.
Our management uses Adjusted Net (Loss) Income and Adjusted
Diluted (Loss) Earnings Per Share to assess our overall
performance, without regard to items that are considered to be
unique or non-recurring in nature or otherwise unrelated to our
ongoing revenue-generating operations, net of the income tax
effects of adjustments.
Our management uses Adjusted Net (Loss) Income for planning
purposes, including the preparation of our annual operating budget,
as a measure of our core operating results and the effectiveness of
our business strategy, and in evaluating our financial performance.
We also believe this information will be useful for investors to
facilitate comparisons of our operating performance and better
identify trends in our business.
Adjusted EBITDA and Adjusted EBITDA Margin
We define Adjusted EBITDA as net loss adjusted to exclude income
tax expense; interest expense; other (income) expense, net,
excluding a gain related to the mark to market adjustment on shares
received in relation to the sale and settlement of trade
receivables; unrealized loss (gain) on foreign currency exchange;
stock-based compensation expense; depreciation and amortization
expense; acquisition costs; certain professional fees that are
considered unrelated to our ongoing revenue generating operations;
employer payroll related expense on employee equity incentive plan;
and restructuring charges. We calculate Adjusted EBITDA Margin by
dividing Adjusted EBITDA by total revenues.
Adjusted EBITDA and Adjusted EBITDA Margin are widely used by
investors and securities analysts to measure a company's operating
performance without regard to the aforementioned adjustments that
can vary substantially from company to company depending upon their
financing, capital structures, and the method by which assets were
acquired or costs that are unique or non-recurring in nature or
otherwise unrelated to our ongoing revenue-generating
operations.
Our management uses Adjusted EBITDA and Adjusted EBITDA Margin
for planning purposes, including the preparation of our annual
operating budget, as a measure of our core operating results and
the effectiveness of our business strategy, and in evaluating our
financial performance. We also believe this information will be
useful for investors to facilitate comparisons of our operating
performance and better identify trends in our business.
Free Cash Flow
We define Free Cash Flow as net cash (used in) provided by
operating activities less cash used for purchases of property and
equipment. We believe that Free Cash Flow is a useful indicator of
liquidity for investors and is used by our management as it
measures our ability to generate cash, or our need to access
additional sources of cash, to fund operations and investments.
There are a number of limitations related to the use of free cash
flow as compared to net cash from operating activities, including
that Free Cash Flow includes capital expenditures, the benefits of
which are realized in periods subsequent to those when expenditures
are made.
THOUGHTWORKS HOLDING,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(In thousands, except share
and per share data)
(unaudited)
Three months ended March
31,
2024
2023
Revenues
$
248,593
$
307,056
Operating expenses:
Cost of revenues
178,813
209,522
Selling, general and administrative
expenses
76,230
86,340
Depreciation and amortization
5,635
5,542
Restructuring
2,115
—
Total operating expenses
262,793
301,404
(Loss) income from operations
(14,200
)
5,652
Other (expense) income:
Interest expense
(6,586
)
(6,862
)
Net realized and unrealized foreign
currency (loss) gain
(10,408
)
1,185
Other income (expense), net
349
(723
)
Total other expense
(16,645
)
(6,400
)
Loss before income taxes
(30,845
)
(748
)
Income tax expense
37
7,359
Net loss
$
(30,882
)
$
(8,107
)
Other comprehensive (loss) income, net of
tax:
Foreign currency translation
adjustments
(364
)
242
Comprehensive loss
$
(31,246
)
$
(7,865
)
Net loss per common share:
Basic loss per common share
$
(0.10
)
$
(0.03
)
Diluted loss per common share
$
(0.10
)
$
(0.03
)
Weighted average shares
outstanding:
Basic
322,638,110
316,451,601
Diluted
322,638,110
316,451,601
Stock-based compensation expense included in the condensed
consolidated statements of loss and comprehensive loss was as
follows:
Three months ended March
31,
2024
2023
Cost of revenues
$
5,599
$
10,530
Selling, general and administrative
expenses
5,020
7,149
Total stock-based compensation expense
$
10,619
$
17,679
THOUGHTWORKS HOLDING,
INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
and per share data)
March 31, 2024
December 31, 2023
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
72,554
$
100,305
Trade receivables, net of allowance of
$9,991 and $9,550, respectively
130,560
167,942
Unbilled receivables
133,980
115,150
Prepaid expenses
18,230
19,692
Other current assets
25,816
25,269
Total current assets
381,140
428,358
Property and equipment, net
27,246
26,046
Right-of-use assets
39,198
41,771
Intangibles and other assets:
Goodwill
419,875
424,565
Trademark
273,000
273,000
Customer relationships, net
108,933
114,186
Other non-current assets
19,128
19,310
Total assets
$
1,268,520
$
1,327,236
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
$
4,266
$
2,767
Long-term debt, current
7,150
7,150
Accrued compensation
72,721
88,712
Deferred revenue
12,138
18,090
Accrued expenses and other current
liabilities
22,223
27,260
Lease liabilities, current
14,092
15,301
Total current liabilities
132,590
159,280
Lease liabilities, non-current
28,032
29,791
Long-term debt, less current portion
284,364
286,035
Deferred tax liabilities
47,708
54,907
Other long-term liabilities
22,470
24,093
Total liabilities
515,164
554,106
Commitments and contingencies
Stockholders’ equity:
Convertible preferred stock, $0.001 par
value; 100,000,000 shares authorized, zero issued and outstanding
at March 31, 2024 and December 31, 2023, respectively
—
—
Common stock, $0.001 par value;
1,000,000,000 shares authorized, 373,295,466 and 372,876,082
issued, 322,826,928 and 322,407,385 outstanding at March 31, 2024
and December 31, 2023, respectively
373
373
Treasury stock, 50,468,538 and 50,468,697
shares at March 31, 2024 and December 31, 2023, respectively
(622,987
)
(622,988
)
Additional paid-in capital
1,638,964
1,627,491
Accumulated other comprehensive loss
(38,530
)
(38,166
)
Retained deficit
(224,464
)
(193,580
)
Total stockholders' equity
753,356
773,130
Total liabilities and stockholders'
equity
$
1,268,520
$
1,327,236
THOUGHTWORKS HOLDING,
INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS (unaudited)
(In thousands)
Three months ended March
31,
2024
2023
Cash flows from operating
activities:
Net loss
$
(30,882
)
$
(8,107
)
Adjustments to reconcile net loss to net
cash (used in) provided by operating activities:
Depreciation and amortization expense
7,155
9,089
Bad debt expense
821
1,452
Deferred income tax benefit
(5,893
)
(4,485
)
Stock-based compensation expense
10,619
17,679
Unrealized foreign currency exchange
loss/(gain)
10,202
(948
)
Non-cash lease expense on right-of-use
assets
4,044
4,525
Other operating activities, net
(52
)
1,413
Changes in operating assets and
liabilities:
Trade receivables
33,720
56,674
Unbilled receivables
(20,708
)
(23,238
)
Prepaid expenses and other assets
797
(1,393
)
Lease liabilities
(3,931
)
(4,705
)
Accounts payable
645
1,975
Accrued expenses and other liabilities
(22,287
)
(16,884
)
Net cash (used in) provided by operating
activities
(15,750
)
33,047
Cash flows from investing
activities:
Purchase of property and equipment
(4,224
)
(1,657
)
Proceeds from disposal of fixed assets
88
91
Acquisitions, net of cash acquired
—
(15,989
)
Net cash used in investing activities
(4,136
)
(17,555
)
Cash flows from financing
activities:
Payments of obligations of long-term
debt
(1,788
)
(101,788
)
Payments of debt issuance costs
—
(99
)
Proceeds from issuance of common stock on
exercise of options
759
2,169
Withholding taxes paid related to net
share settlement of equity awards
(4,053
)
(2,348
)
Other financing activities, net
298
25
Net cash used in financing activities
(4,784
)
(102,041
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(2,783
)
1,548
Net decrease in cash, cash equivalents and
restricted cash
(27,453
)
(85,001
)
Cash, cash equivalents and restricted cash
at beginning of the period
101,660
195,564
Cash, cash equivalents and restricted cash
at end of the period
$
74,207
$
110,563
Supplemental disclosure of cash flow
information:
Interest paid
$
6,063
$
6,645
Income taxes paid
$
5,623
$
6,856
Reconciliation of cash, cash
equivalents and restricted cash:
Cash and cash equivalents
$
72,554
$
109,268
Restricted cash included in other
non-current assets
1,653
1,295
Total cash, cash equivalents and
restricted cash
$
74,207
$
110,563
THOUGHTWORKS HOLDING,
INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(In thousands, except
percentages, share and per share data)
(unaudited)
Three months ended March
31,
2024
2023
Net loss
$
(30,882
)
$
(8,107
)
Unrealized foreign exchange loss
(gain)
10,202
(948
)
Stock-based compensation
10,619
17,679
Amortization of acquisition-related
intangibles
3,657
3,591
Acquisition costs (a)
909
1,706
Certain professional fees (b)
—
225
Employer payroll related expense on
employee equity incentive plan (c)
221
242
Restructuring (d)
2,115
—
Income tax effects of adjustments (e)
(4,284
)
(4,321
)
Adjusted Net (Loss) Income
$
(7,443
)
$
10,067
GAAP diluted weighted average common
shares outstanding
322,638,110
316,451,601
Employee stock options, RSUs and PSUs
—
14,830,984
Adjusted diluted weighted average
common shares outstanding
322,638,110
331,282,585
GAAP diluted loss per share
$
(0.10
)
$
(0.03
)
Adjusted Diluted (Loss) Earnings Per
Share
$
(0.02
)
$
0.03
Three months ended March
31,
2024
2023
Net loss
$
(30,882
)
$
(8,107
)
Income tax expense
37
7,359
Interest expense
6,586
6,862
Other (income) expense, net (f)
(186
)
793
Unrealized foreign exchange loss
(gain)
10,202
(948
)
Stock-based compensation
10,619
17,679
Depreciation and amortization
7,155
9,089
Acquisition costs (a)
909
1,706
Certain professional fees (b)
—
225
Employer payroll related expense on
employee equity incentive plan (c)
221
242
Restructuring (d)
2,115
—
Adjusted EBITDA
$
6,776
$
34,900
Net loss margin
(12.4
)%
(2.6
)%
Adjusted EBITDA Margin
2.7
%
11.4
%
THOUGHTWORKS HOLDING,
INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(In thousands, except
percentages, share and per share data)
(unaudited)
Three months ended March
31,
2024
2023
Gross profit, GAAP
$
69,780
$
97,534
Stock-based compensation
5,599
10,530
Employer payroll related expense on
employee equity incentive plan (c)
223
186
Depreciation expense
1,520
3,547
Adjusted Gross Profit
$
77,122
$
111,797
Gross margin, GAAP
28.1
%
31.8
%
Adjusted Gross Margin
31.0
%
36.4
%
Three months ended March
31,
2024
2023
SG&A, GAAP
$
76,230
$
86,340
Stock-based compensation
(5,020
)
(7,149
)
Acquisition costs (a)
(909
)
(1,706
)
Certain professional fees (b)
—
(225
)
Employer payroll related expense on
employee equity incentive plan (c)
2
(56
)
Adjusted SG&A
$
70,303
$
77,204
SG&A margin, GAAP
30.7
%
28.1
%
Adjusted SG&A Margin
28.3
%
25.1
%
(a)
Adjusts for certain professional fees and
retention wage expenses related to certain acquisitions.
(b)
Adjusts for certain one-time professional
fees.
(c)
Adjusts for employer payroll related
expense on employee equity incentive plan as these expenses are
tied to the exercise or vesting of underlying equity awards and the
price of our common stock at the time of vesting or exercise. As a
result, these expenses may vary in any particular period
independent of the financial and operating performance of our
business.
(d)
Adjusts for restructuring costs which
include wage-related expenses, such as employee severance and
related benefits, and non-wage related expenses, including costs
related to reducing leased office space, vendor contract
cancellations, professional fees, and other reorganization
costs.
(e)
Adjusts for the income tax effects of the
foregoing adjusted items, determined under the discrete method
consistent with our non-GAAP measures of profitability.
(f)
QTD Q1 2024 and QTD Q1 2023 exclude a $0.2
million gain and $0.1 million gain, respectively, related to the
mark to market adjustment on shares received in relation to the
sale and settlement of trade receivables. The gains were included
within other income (expense), net in the consolidated statements
of loss and comprehensive loss.
Three months ended March
31,
2024
2023
Net cash (used in) provided by
operating activities
$
(15,750
)
$
33,047
Purchase of property and equipment
(4,224
)
(1,657
)
Free Cash Flow
$
(19,974
)
$
31,390
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240506115519/en/
Investors: Thoughtworks Holding, Inc. Rob Muller:
investor-relations@thoughtworks.com
Press: Thoughtworks Holding, Inc. Linda Horiuchi:
linda.horiuchi@thoughtworks.com
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