- Fourth quarter revenues of $252.4 million and full year
revenues of $1,126.8 million
- Provides guidance for the full year and first quarter of
2024
Thoughtworks Holding, Inc. (NASDAQ: TWKS) ("Thoughtworks" or the
"Company"), a leading global technology consultancy, today reported
results for the fourth quarter and full year 2023 and provided its
financial outlook for the full year and first quarter of 2024.
Guo Xiao, Thoughtworks' Chief Executive Officer, said, "I am
grateful to all Thoughtworkers for their dedication and commitment
to delivering extraordinary impact with our clients. In the fourth
quarter, we delivered $252.4 million in revenues, 5% below our
guidance, primarily due to specific supply constraints to meet
client demand in addition to continued cautious client behavior
within the current macroeconomic environment.
Our deep and trusted client relationships are again reflected in
the 54 clients with bookings over $5 million. We added 46 new
clients in the quarter, continuing our strong performance in logo
acquisition.
We are delivering notable cost savings through our restructuring
program. We have now realized $81 million in annualized cost
savings from the actions we have taken to drive ongoing
efficiencies.
Our foundation is resilient, supported by a strong client base.
Thoughtworks’ outstanding technologists underpin our reputation for
innovation and thought leadership. As we move forward, we are
well-positioned to help our clients modernize and evolve their
operations to harness the power of Cloud, Data and AI and adapt for
future success.”
Update on Restructuring Activities
On August 8, 2023, Thoughtworks initiated several measures to
reduce operational cost and better align our business with our
customers’ needs in a challenging macroeconomic environment. As of
December 31, 2023, we had substantially completed our
reorganization. We have (i) implemented changes to centralize our
operational functions; (ii) launched our Digital Engineering
Center, which is our new organizational home for the majority of
our professional services teams; (iii) instituted a new regional
market structure; and (iv) implemented leadership changes to align
with our new operating model. By the end of the fourth quarter, we
achieved $81 million of the annualized savings, positioning us well
to continue to drive savings in 2024. The majority of our
wage-related actions, such as employee severance and related
benefits, are complete, and we remain focused on driving
operational efficiencies in 2024.
As of December 31, 2023, Thoughtworks had incurred pre-tax cash
charges of approximately $18.9 million (the “2023 Charges”). The
2023 Charges include $17.2 million in wage-related costs and $1.7
million in non-wage related expenses, including costs primarily
related to reducing leased office space, vendor contract
cancellations and professional fees.
QTD fourth quarter 2023 highlights
Revenues for the fourth quarter were $252.4 million, a
year-over-year decline of (18.8)%, or a year-over-year decline of
(19.8)% in constant currency. Acquisitions completed in the last
twelve months contributed approximately 1% to revenue growth in the
quarter.
Net loss margin for the fourth quarter was (8.9)% compared to
net income margin of 5.2% for the fourth quarter of 2022. Adjusted
EBITDA Margin for the fourth quarter was 5.5% compared to 18.7% for
the fourth quarter of 2022.
Diluted loss per share for the fourth quarter was $(0.07)
compared to diluted earnings per share of $0.05 for the fourth
quarter of 2022. Adjusted Diluted EPS for the fourth quarter was
$0.02 compared to $0.10 for the fourth quarter of 2022.
Stock-based compensation for the fourth quarter was $16.9
million compared to $21.6 million for the fourth quarter of
2022.
Full year 2023 highlights
Revenues for the year ended were $1,126.8 million, a
year-over-year decline of (13.1)%, or a year-over-year decline of
(12.6)% in constant currency. Acquisitions completed in the last
twelve months contributed approximately 2% to revenue growth for
the year ended December 31, 2023.
Net loss margin for the year ended was (6.1)% compared to net
loss margin of (8.1)% for the year ended December 31, 2022.
Adjusted EBITDA Margin for the year ended was 9.9% compared to
19.8% for the year ended December 31, 2022.
Diluted loss per share for the year ended was $(0.22) compared
to diluted loss per share of $(0.34) for the year ended December
31, 2022. Adjusted Diluted EPS for the year ended was $0.11
compared to $0.43 for the year ended December 31, 2022.
Stock-based compensation for the year ended was $65.0 million
compared to $249.9 million for the year ended December 31, 2022. As
of December 31, 2023, all non-recurring grants related to our
initial public offering have fully vested.
QTD fourth quarter 2023 summary
Three Months Ended December
31,
$ in millions, except per share data
2023
2022
Change
% Change(1)
GAAP Metrics:
Revenues(2)
$
252.4
$
310.7
$
(58.3
)
(18.8
)%
Gross Profit
$
71.4
$
104.8
$
(33.4
)
(31.9
)%
Gross Margin
28.3
%
33.7
%
(5.4
)%
SG&A
$
77.0
$
77.0
$
—
—
%
SG&A Margin
30.5
%
24.8
%
5.7
%
Stock-based compensation
$
16.9
$
21.6
$
(4.7
)
(21.8
)%
Net (loss) income
$
(22.4
)
$
16.1
$
(38.5
)
Net (loss) income margin
(8.9
)%
5.2
%
(14.1
)%
Diluted (loss) earnings per share
$
(0.07
)
$
0.05
$
(0.12
)
Cash flow from operations
$
12.5
$
33.0
$
(20.5
)
(62.1
)%
Non-GAAP Metrics(3):
Revenue Growth Rate at constant
currency(4)
(19.8
)%
14.7
%
Adjusted Gross Profit
$
84.9
$
123.4
$
(38.5
)
(31.2
)%
Adjusted Gross Margin
33.6
%
39.7
%
(6.1
)%
Adjusted SG&A
$
70.8
$
68.8
$
2.0
2.9
%
Adjusted SG&A Margin
28.0
%
22.1
%
5.9
%
Adjusted Net Income
$
5.6
$
32.2
$
(26.6
)
(82.6
)%
Adjusted EBITDA
$
14.0
$
58.2
$
(44.2
)
(75.9
)%
Adjusted EBITDA Margin
5.5
%
18.7
%
(13.2
)%
Adjusted Diluted EPS
$
0.02
$
0.10
$
(0.08
)
(80.0
)%
Free Cash Flow
$
9.9
$
28.2
$
(18.3
)
(64.9
)%
Full year 2023 summary
Year Ended December
31,
$ in millions, except per share data
2023
2022
Change
% Change(1)
GAAP Metrics:
Revenues(2)
$
1,126.8
$
1,296.2
$
(169.4
)
(13.1
)%
Gross Profit
$
354.0
$
345.9
$
8.1
2.3
%
Gross Margin
31.4
%
26.7
%
4.7
%
SG&A
$
331.8
$
372.8
$
(41.0
)
(11.0
)%
SG&A Margin
29.4
%
28.8
%
0.6
%
Stock-based compensation
$
65.0
$
249.9
$
(184.9
)
(74.0
)%
Net loss
$
(68.7
)
$
(105.4
)
$
36.7
Net loss margin
(6.1
)%
(8.1
)%
2.0
%
Diluted loss per share
$
(0.22
)
$
(0.34
)
$
0.12
Cash flow from operations
$
49.1
$
89.4
$
(40.3
)
(45.1
)%
Non-GAAP Metrics(3):
Revenue Growth Rate at constant
currency(4)
(12.6
)%
26.8
%
Adjusted Gross Profit
$
406.6
$
539.9
$
(133.3
)
(24.7
)%
Adjusted Gross Margin
36.1
%
41.6
%
(5.5
)%
Adjusted SG&A
$
296.8
$
290.3
$
6.5
2.2
%
Adjusted SG&A Margin
26.3
%
22.4
%
3.9
%
Adjusted Net Income
$
37.3
$
139.9
$
(102.6
)
(73.2
)%
Adjusted EBITDA
$
111.7
$
256.8
$
(145.1
)
(56.5
)%
Adjusted EBITDA Margin
9.9
%
19.8
%
(9.9
)%
Adjusted Diluted EPS
$
0.11
$
0.43
$
(0.32
)
(74.4
)%
Free Cash Flow
$
40.1
$
64.9
$
(24.8
)
(38.2
)%
(1)
For QTD and YTD, percentage change for net
loss and diluted loss per share 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 contributed approximately 1% to revenue growth for the
quarter and 2% for the year ended December 31, 2023.
(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
December 31, 2023 was $1.2 billion, a sequential and year-over-year
decrease from $1.4 billion. The 14.3% 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
December 31,
$ in millions
2023
2022
# of clients with bookings greater than
$10 million
25
39
# of clients with bookings between $5
million and $10 million
29
26
Revenue by geography(5)
Three Months Ended December
31,
Year Ended December
31,
$ in thousands
2023
2022
% Change
2023
2022
% Change
North America
$
93,816
$
121,092
(22.5)%
$
417,571
$
503,948
(17.1)%
APAC
89,279
99,749
(10.5)%
387,061
419,982
(7.8)%
Europe
60,866
76,409
(20.3)%
280,390
315,875
(11.2)%
LATAM
8,425
13,494
(37.6)%
41,794
56,433
(25.9)%
Total revenues
$
252,386
$
310,744
(18.8)%
$
1,126,816
$
1,296,238
(13.1)%
(5)
Revenues are presented geographically, by
customer location.
Revenue by industry vertical
Three Months Ended December
31,
Year Ended December
31,
$ in thousands
2023
2022
% Change
2023
2022
% Change
Technology and business services
$
64,824
$
85,302
(24.0)%
$
279,264
$
360,117
(22.5)%
Energy, public and health services
63,015
79,377
(20.6)%
294,029
316,478
(7.1)%
Retail and consumer
39,788
53,749
(26.0)%
176,848
236,731
(25.3)%
Financial services and insurance
43,027
48,609
(11.5)%
197,407
221,748
(11.0)%
Automotive, travel and transportation
41,732
43,707
(4.5)%
179,268
161,164
11.2%
Total revenues
$
252,386
$
310,744
(18.8)%
$
1,126,816
$
1,296,238
(13.1)%
Liquidity
We had cash and cash equivalents of $100.3 million as of
December 31, 2023, along with $300.0 million of borrowing capacity
under our revolving credit line, which was undrawn as of December
31, 2023. Our total debt outstanding, before deferred financing
fees, was $295.3 million at December 31, 2023.
Financial outlook
Thoughtworks provides the following outlook for the first
quarter and full year 2024:
First quarter
Thoughtworks expects the following for the first quarter:
- Revenues in the range of $241 million to $246 million,
reflecting year-over-year decline of (21)% to (20)% in U.S. dollars
and in constant currency, which includes an immaterial contribution
from acquisitions;
- Adjusted EBITDA Margin(6) in the range of 3.0% to 4.0%;
- Adjusted diluted loss per share(6) in the range of $(0.02) to
$(0.01), assuming a weighted average of 323 million diluted
outstanding shares; and
- Stock-based compensation expense of $11 million.
Full year
Thoughtworks expects the following for the full year:
- Revenues in the range of $980 million to $1,010 million,
reflecting year-over-year decline of (13)% to (10)%, or (13)% to
(11)% 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 $0.01 to $0.06,
assuming a weighted average of 333 million diluted outstanding
shares; and
- Stock-based compensation expense of $46 million.
(6)
Adjusted EBITDA Margin and Adjusted
Diluted EPS exclude restructuring charges.
Conference call information
Thoughtworks will host a conference call and webcast at 8:00
a.m. Eastern Time on Tuesday, February 27, 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 48 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 Income and Adjusted Diluted EPS
We define Adjusted Net Income as net (loss) income adjusted for
unrealized (gain) loss 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,
final tax assessment for closed operations, change in fair value of
contingent consideration, restructuring charges and income tax
effects of adjustments.
We define Adjusted Diluted EPS as diluted (loss) earnings per
share, with the numerator adjusted for the aforementioned
adjustments to Adjusted Net Income. In other words, the numerator
for Adjusted Diluted EPS utilizes Adjusted Net Income. We calculate
Adjusted Diluted EPS by dividing Adjusted Net Income by diluted
weighted average shares outstanding.
Our management uses Adjusted Net Income and Adjusted Diluted EPS
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 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) income adjusted to
exclude income tax expense; interest expense; other expense, net,
excluding a gain in 2023 related to the mark to market adjustment
on shares received in relation to the sale and settlement of trade
receivables in 2022 and a gain in 2022 from the sale and settlement
of trade receivables; unrealized (gain) loss 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; final tax assessment for closed operations; 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 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.
CONSOLIDATED STATEMENTS OF
LOSS AND COMPREHENSIVE LOSS
(In thousands, except share
and per share data)
(unaudited)
Three months ended December
31,
Year ended December
31,
2023
2022
2023
2022
Revenues
$
252,386
$
310,744
$
1,126,816
$
1,296,238
Operating expenses:
Cost of revenues
180,955
205,939
772,800
950,305
Selling, general and administrative
expenses
77,024
76,962
331,830
372,761
Depreciation and amortization
6,141
5,120
23,554
20,484
Restructuring
3,378
—
18,944
—
Total operating expenses
267,498
288,021
1,147,128
1,343,550
(Loss) income from operations
(15,112
)
22,723
(20,312
)
(47,312
)
Other (expense) income:
Interest expense
(6,577
)
(6,959
)
(26,238
)
(22,461
)
Net realized and unrealized foreign
currency gain (loss)
11,533
13,498
3,875
(5,405
)
Other (expense) income, net
90
(1,121
)
(455
)
610
Total other (expense) income
5,046
5,418
(22,818
)
(27,256
)
(Loss) income before income taxes
(10,066
)
28,141
(43,130
)
(74,568
)
Income tax expense
12,364
12,033
25,531
30,825
Net (loss) income
$
(22,430
)
$
16,108
$
(68,661
)
$
(105,393
)
Other comprehensive (loss) income, net of
tax:
Foreign currency translation
adjustments
5,273
17,082
1,044
(28,366
)
Comprehensive (loss) income
$
(17,157
)
$
33,190
$
(67,617
)
$
(133,759
)
Net (loss) earnings per common
share:
Basic (loss) earnings per common share
$
(0.07
)
$
0.05
$
(0.22
)
$
(0.34
)
Diluted (loss) earnings per common
share
$
(0.07
)
$
0.05
$
(0.22
)
$
(0.34
)
Weighted average shares
outstanding:
Basic
319,243,414
315,153,905
317,718,424
310,911,526
Diluted
319,243,414
329,639,919
317,718,424
310,911,526
Stock-based compensation expense included in the consolidated
statements of loss and comprehensive loss was as follows:
Three months ended December
31,
Year ended December
31,
2023
2022
2023
2022
Cost of revenues
$
10,293
$
15,006
$
38,981
$
176,046
Selling, general and administrative
expenses
6,445
6,601
25,848
73,869
Restructuring
197
—
197
—
Total stock-based compensation expense
$
16,935
$
21,607
$
65,026
$
249,915
THOUGHTWORKS HOLDING,
INC.
CONSOLIDATED BALANCE
SHEETS
(In thousands, except share
and per share data)
December 31, 2023
December 31, 2022
(unaudited)
Assets
Current assets:
Cash and cash equivalents
$
100,305
$
194,294
Trade receivables, net of allowance of
$9,550 and $9,531, respectively
167,942
201,695
Unbilled receivables
115,150
122,499
Prepaid expenses
19,692
19,353
Other current assets
25,269
18,849
Total current assets
428,358
556,690
Property and equipment, net
26,046
38,798
Right-of-use assets
41,771
43,123
Intangibles and other assets:
Goodwill
424,565
405,017
Trademark
273,000
273,000
Customer relationships, net
114,186
124,047
Other non-current assets
19,310
21,175
Total assets
$
1,327,236
$
1,461,850
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
$
2,767
$
5,248
Long-term debt, current
7,150
7,150
Income taxes payable
5,106
22,781
Accrued compensation
88,712
85,477
Deferred revenue
18,090
5,167
Accrued expenses and other current
liabilities
22,154
37,753
Lease liabilities, current
15,301
15,994
Total current liabilities
159,280
179,570
Lease liabilities, non-current
29,791
29,885
Long-term debt, less current portion
286,035
391,856
Deferred tax liabilities
54,907
62,555
Other long-term liabilities
24,093
19,762
Total liabilities
554,106
683,628
Commitments and contingencies
Stockholders’ equity:
Convertible preferred stock, $0.001 par
value; 100,000,000 shares authorized, zero issued and outstanding
at December 31, 2023 and December 31, 2022, respectively
—
—
Common stock, $0.001 par value;
1,000,000,000 shares authorized, 372,876,082 and 366,306,970
issued, 322,407,385 and 315,681,987 outstanding at December 31,
2023 and December 31, 2022, respectively
373
366
Treasury stock, 50,468,697 and 50,624,983
shares at December 31, 2023 and December 31, 2022, respectively
(622,988
)
(624,934
)
Additional paid-in capital
1,627,491
1,565,514
Accumulated other comprehensive loss
(38,166
)
(39,210
)
Retained deficit
(193,580
)
(123,514
)
Total stockholders' equity
773,130
778,222
Total liabilities and stockholders'
equity
$
1,327,236
$
1,461,850
THOUGHTWORKS HOLDING,
INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS (unaudited)
(In thousands)
Year ended December
31,
2023
2022
Cash flows from operating
activities:
Net loss
$
(68,661
)
$
(105,393
)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation and amortization expense
36,450
34,446
Bad debt expense
4,606
2,002
Deferred income tax benefit
(8,351
)
(19,425
)
Stock-based compensation expense
65,026
250,505
Unrealized foreign currency exchange
(gain)/loss
(2,271
)
10,106
Non-cash lease expense on right-of-use
assets
18,407
18,597
Other operating activities, net
3,715
3,300
Changes in operating assets and
liabilities:
Trade receivables
32,661
(61,877
)
Unbilled receivables
7,582
(20,711
)
Prepaid expenses
(265
)
(3,567
)
Other assets
(11,841
)
2,657
Lease liabilities
(18,269
)
(16,721
)
Accounts payable
(2,597
)
144
Accrued expenses and other liabilities
(7,128
)
(4,674
)
Net cash provided by operating
activities
49,064
89,389
Cash flows from investing
activities:
Purchase of property and equipment
(8,953
)
(24,505
)
Proceeds from disposal of fixed assets
351
571
Acquisitions, net of cash acquired
(15,989
)
(70,011
)
Net cash used in investing activities
(24,591
)
(93,945
)
Cash flows from financing
activities:
Payments of obligations of long-term
debt
(107,150
)
(107,150
)
Payments of debt issuance costs
(99
)
(3,635
)
Proceeds from issuance of common stock on
exercise of options, net of employee tax withholding
6,564
6,766
Withholding taxes paid on tender offer
—
(15,469
)
Withholding taxes paid on dividends
previously declared
—
(10,009
)
Withholding taxes paid related to net
share settlement of equity awards
(5,621
)
(45,643
)
Payment of contingent consideration
(13,996
)
—
Other financing activities, net
85
15
Net cash used in financing activities
(120,217
)
(175,125
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
1,840
(19,697
)
Net decrease in cash, cash equivalents and
restricted cash
(93,904
)
(199,378
)
Cash, cash equivalents and restricted cash
at beginning of the period
195,564
394,942
Cash, cash equivalents and restricted cash
at end of the period
$
101,660
$
195,564
Supplemental disclosure of cash flow
information:
Interest paid
$
24,824
$
20,984
Income taxes paid
$
50,250
$
30,283
Supplemental disclosure of non-cash
investing and financing activities:
Withholding taxes payable included within
accrued compensation
$
3,444
$
1,020
Option costs receivable included within
other current assets
$
—
$
257
Reconciliation of cash, cash
equivalents and restricted cash:
Cash and cash equivalents
$
100,305
$
194,294
Restricted cash included in other
non-current assets
1,355
1,270
Total cash, cash equivalents and
restricted cash
$
101,660
$
195,564
THOUGHTWORKS HOLDING,
INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(In thousands, except
percentages, share and per share data)
(unaudited)
Three months ended December
31,
Year ended December
31,
2023
2022
2023
2022
Net (loss) income
$
(22,430
)
$
16,108
$
(68,661
)
$
(105,393
)
Unrealized foreign exchange (gain)
loss
(11,759
)
(12,136
)
(2,271
)
10,106
Stock-based compensation (a)
16,738
21,607
64,829
249,915
Amortization of acquisition-related
intangibles
3,634
3,400
14,550
13,144
Acquisition costs (b)
1,306
1,082
6,645
4,126
Certain professional fees (c)
(1,797
)
382
2,004
2,014
Employer payroll related expense on
employee equity incentive plan (d)
487
(94
)
1,242
6,353
Final tax assessment for closed operations
(e)
—
—
—
258
Change in fair value of contingent
consideration (f)
—
3,454
129
1,027
Restructuring (g)
3,378
—
18,944
—
Income tax effects of adjustments (h)
16,032
(1,650
)
(125
)
(41,639
)
Adjusted Net Income
$
5,589
$
32,153
$
37,286
$
139,911
GAAP diluted weighted average common
shares outstanding
319,243,414
315,153,905
317,718,424
310,911,526
Employee stock options, RSUs and PSUs
8,882,996
14,486,014
11,840,056
17,974,425
Adjusted diluted weighted average
common shares outstanding
328,126,410
329,639,919
329,558,480
328,885,951
GAAP diluted (loss) earnings per
share
$
(0.07
)
$
0.05
$
(0.22
)
$
(0.34
)
Adjusted Diluted EPS
$
0.02
$
0.10
$
0.11
$
0.43
THOUGHTWORKS HOLDING,
INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(In thousands, except
percentages, share and per share data)
(unaudited)
Three months ended December
31,
Year ended December
31,
2023
2022
2023
2022
Net (loss) income
$
(22,430
)
$
16,108
$
(68,661
)
$
(105,393
)
Income tax expense
12,364
12,033
25,531
30,825
Interest expense
6,577
6,959
26,238
22,461
Other expense, net (i)
25
3,413
784
1,682
Unrealized foreign exchange (gain)
loss
(11,759
)
(12,136
)
(2,271
)
10,106
Stock-based compensation (a)
16,738
21,607
64,829
249,915
Depreciation and amortization
9,083
8,885
36,450
34,446
Acquisition costs (b)
1,306
1,082
6,645
4,126
Certain professional fees (c)
(1,797
)
382
2,004
2,014
Employer payroll related expense on
employee equity incentive plan (d)
487
(94
)
1,242
6,353
Final tax assessment for closed operations
(e)
—
—
—
258
Restructuring (g)
3,378
—
18,944
—
Adjusted EBITDA
$
13,972
$
58,239
$
111,735
$
256,793
Net (loss) income margin
(8.9
)%
5.2
%
(6.1
)%
(8.1
)%
Adjusted EBITDA Margin
5.5
%
18.7
%
9.9
%
19.8
%
Three months ended December
31,
Year ended December
31,
2023
2022
2023
2022
Gross profit, GAAP
$
71,431
$
104,805
$
354,016
$
345,933
Stock-based compensation
10,293
15,006
38,981
176,046
Employer payroll related expense on
employee equity incentive plan (d)
210
(222
)
662
3,930
Depreciation expense
2,942
3,764
12,896
13,962
Adjusted Gross Profit
$
84,876
$
123,353
$
406,555
$
539,871
Gross margin, GAAP
28.3
%
33.7
%
31.4
%
26.7
%
Adjusted Gross Margin
33.6
%
39.7
%
36.1
%
41.6
%
Three months ended December
31,
Year ended December
31,
2023
2022
2023
2022
SG&A, GAAP
$
77,024
$
76,962
$
331,830
$
372,761
Stock-based compensation
(6,445
)
(6,601
)
(25,848
)
(73,869
)
Acquisition costs (b)
(1,306
)
(1,082
)
(6,645
)
(4,126
)
Certain professional fees (c)
1,797
(382
)
(2,004
)
(2,014
)
Employer payroll related expense on
employee equity incentive plan (d)
(277
)
(128
)
(580
)
(2,423
)
Adjusted SG&A
$
70,793
$
68,769
$
296,753
$
290,329
SG&A margin, GAAP
30.5
%
24.8
%
29.4
%
28.8
%
Adjusted SG&A Margin
28.0
%
22.1
%
26.3
%
22.4
%
(a)
QTD Q4 2023 and YTD 2023 exclude $0.2
million related to the restructuring which is included in the
restructuring line.
(b)
Adjusts for certain professional fees and
retention wage expenses related to certain acquisitions.
(c)
Adjusts for certain transaction expenses,
non-recurring legal expenses, and one-time professional fees.
(d)
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.
(e)
Adjusts for certain tax related expenses
related to final tax assessments from closing operations in Uganda,
which was completely shut down in 2015.
(f)
Adjusts for the non-cash adjustment to the
fair value of contingent consideration.
(g)
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 and professional fees.
(h)
Adjusts for the income tax effects of the
foregoing adjusted items, determined under a discrete method
consistent with our non-GAAP measures of profitability.
(i)
QTD Q4 2022 and YTD 2022 exclude a $2.3
million gain related to the sale and settlement of trade
receivables. QTD Q4 2023 and YTD 2023 exclude a $0.1 million gain
and $0.3 million gain, respectively, related to the mark to market
adjustment on shares received in relation to the aforementioned
sale and settlement of trade receivables in 2022. The gains were
included within other (expense) income, net in the consolidated
statements of loss and comprehensive loss.
Three months ended December
31,
Year ended December
31,
2023
2022
2023
2022
Net cash provided by operating
activities
$
12,466
$
33,048
$
49,064
$
89,389
Purchase of property and equipment
(2,602
)
(4,833
)
(8,953
)
(24,505
)
Free Cash Flow
$
9,864
$
28,215
$
40,111
$
64,884
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240226072654/en/
Investors: Thoughtworks Holding, Inc. Rob Muller:
investor-relations@thoughtworks.com
Press: Thoughtworks Holding, Inc. Linda Horiuchi:
linda.horiuchi@thoughtworks.com
Thoughtworks (NASDAQ:TWKS)
Historical Stock Chart
From Apr 2024 to May 2024
Thoughtworks (NASDAQ:TWKS)
Historical Stock Chart
From May 2023 to May 2024