Thoughtworks Holding, Inc. (NASDAQ:TWKS) Q3 2023 Results Conference Call November 7, 2023 8:00 AM ET Hello, everyone, and welcome to Thoughtworks Earnings Call for the Third Quarter of 2023. We will be recording today's call, and during the presentation, all lines will be on listen only. Joining us today will be Thoughtworks President and CEO, Guo Xiao; and CFO, Erin Cummins. The earnings press release was issued earlier today and is also available on our Investor Relations page at thoughtworks.com. Some of ...

Financial Performance - Revenues for Q3 2023 were $280,159,000, a decrease of 15.7% compared to $332,447,000 in Q3 2022[19]. - Operating expenses totaled $289,388,000 in Q3 2023, down 15.2% from $341,124,000 in Q3 2022[19]. - Net loss for Q3 2023 was $25,852,000, compared to a net loss of $38,608,000 in Q3 2022, representing a 32.9% improvement[19]. - Comprehensive loss for Q3 2023 was $29,672,000, down from $57,825,000 in Q3 2022, indicating a 48.7% reduction[19]. - Total revenues for the nine months ended September 30, 2023, were $874,430 thousand, down 11.3% from $985,494 thousand in the same period of 2022[41]. - Net loss for the nine months ended September 30, 2023, was $46,231 thousand, a significant improvement from a net loss of $121,501 thousand in the same period of 2022, representing a reduction of approximately 62%[24]. - Adjusted Net Income for the three months ended September 30, 2023, was $11,525 thousand, down 56.9% from $26,758 thousand in the same period of 2022[91]. - Adjusted EBITDA for the three months ended September 30, 2023, was $33,563 thousand, a decrease of 50.0% from $67,165 thousand in the same period of 2022[95]. Assets and Liabilities - As of September 30, 2023, total assets decreased to $1,312.7 million from $1,461.9 million as of December 31, 2022, reflecting a decline of approximately 10.2%[17]. - Total liabilities decreased to $534.8 million from $683.6 million, a reduction of about 21.8%[17]. - Stockholders' equity remained relatively stable, slightly decreasing to $777.9 million from $778.2 million[17]. - The company has a long-term debt of $287.7 million, down from $391.9 million, indicating a decrease of approximately 26.6%[17]. - Cash and cash equivalents dropped significantly to $87.4 million, down from $194.3 million, representing a decrease of about 55.1%[17]. - The total cash, cash equivalents, and restricted cash at the end of September 2023 was $88,746 thousand, down from $185,792 thousand at the end of September 2022, reflecting a decrease of 52.3%[25]. Revenue Sources and Client Metrics - Revenue from North America for the nine months ended September 30, 2023, was $323,755 thousand, a decline of 15.4% from $382,856 thousand in the same period of 2022[41]. - The company’s revenue from APAC for the nine months ended September 30, 2023, was $297,782 thousand, down 7.0% from $320,233 thousand in the same period of 2022[41]. - The company’s international revenue represented 65% of total revenue for the nine months ended September 30, 2023, compared to 63% in the same period of 2022[37]. - The number of clients increased to 466 for the trailing twelve months ended September 30, 2023, compared to 403 in the same period of 2022[98]. - The percentage of revenues from existing clients increased to 92.3% for the three months ended September 30, 2023, compared to 84.0% in the same period of 2022[100]. Operational Efficiency - Total operating expenses for the nine months ended September 30, 2023, were $879,630,000, a decrease of 16.7% from $1,055,529,000 in the same period of 2022[19]. - The company incurred restructuring expenses of $15,566,000 in Q3 2023, which were not present in Q3 2022[19]. - Stock-based compensation expense for the nine months ended September 30, 2023, was $48,091 thousand, significantly lower than $228,308 thousand in the same period of 2022, a reduction of 78.9%[24]. - SG&A expenses decreased by 10.7% for the three months ended September 30, 2023, totaling $81,840 thousand compared to $91,682 thousand in 2022[120]. Acquisitions and Goodwill - The acquisition of ITOC Pty Ltd was completed for a gross purchase price of $17.8 million, enhancing the company's cloud service capabilities[51]. - Goodwill increased to $416,372 million as of September 30, 2023, from $405,017 million at the end of 2022, primarily due to the acquisition of ITOC[60]. - The fair value of net assets acquired was determined using Level 3 inputs, requiring future cash flow projections[52]. Tax and Regulatory Considerations - The effective tax rate for Q3 2023 was (4.9)%, significantly lower than (56.8)% in Q3 2022, reflecting various unique unfavorable items[64]. - The effective tax rate for the three months ended September 30, 2023, was (4.9)%, compared to (56.8)% in the same period of 2022[96]. Future Outlook and Risks - The company faces risks associated with attracting new clients and retaining existing relationships, which could impact future revenue growth[11]. - The company expects existing cash and cash equivalents, along with projected cash flow from operations, to be sufficient for operating and capital expenditure requirements for at least the next twelve months[155]. - The company may seek to access debt or capital markets for future acquisitions or investments, subject to market conditions and operating performance[142].

Financial Data and Key Metrics Changes - In Q2 2023, the company reported revenue of $287 million, a decline of 14% year-over-year, and an adjusted EBITDA margin of 10.2%, both below guidance [4][13] - Revenue in constant currency declined by 13% compared to the prior year, with acquisitions contributing 1 percentage point to the revenue growth rate [13][14] - The annualized average revenue per employee was $100,000, remaining above the industry average [13] Business Line Data and Key Metrics Changes - The automotive, travel, and transportation verticals grew by 18% year-over-year, while financial services declined by 12% and technology and business services decreased by 27% [14] - The company's top 5, top 10, and top 50 clients generated 18%, 28%, and 67% of total revenue, respectively [14] Market Data and Key Metrics Changes - Year-over-year revenue declines were observed in North America (20%), Latin America (25%), Europe (8%), and APAC (8%) [14] - The company contracted with 29 new clients in Q2, a year-on-year increase of 12% [7] Company Strategy and Development Direction - The company is undergoing a structural reorganization, reducing employee headcount by approximately 5% to 6% and centralizing operations globally to improve efficiency [5][6] - A new digital engineering center will be established to enhance service delivery and respond to client needs more effectively [6] - The focus is on demand generation programs centered around data and AI services, particularly generative AI [8] Management's Comments on Operating Environment and Future Outlook - Management noted challenges with three top clients that led to significant revenue shortfalls due to budgetary decisions and strategic shifts [4][13] - The company expects revenues for Q3 2023 to be in the range of $275 million to $285 million, reflecting a year-over-year decline of 17% to 14% [16] - Management remains optimistic about the long-term potential, emphasizing the importance of digital transformation for clients [19] Other Important Information - The company reported a negative free cash flow of $19 million for the quarter and an outstanding term loan balance of $299 million as of June 30, 2023 [15] - The company is focused on maintaining long-term relationships with clients despite current budget constraints [43][58] Q&A Session Summary Question: Can you elaborate on the reinvestment into outbound demand? - Management indicated that outbound demand generation efforts have increased from 15% to 45% of new wins, focusing on resilient verticals [22][23] Question: Can you discuss the gross margin dynamics? - Management noted that utilization improved from Q1 to Q2, but the impact of bill rates and mix shift from onshore to offshore affected margins [24][25] Question: How will the centralized model affect selling new business? - The centralized model aims to enhance global delivery and client focus, allowing for better engagement with global clients [28][29] Question: What is the cadence of restructuring savings? - Management anticipates achieving 80% of the expected $75 million to $85 million in annualized cost savings before the end of the year [30][31] Question: Can you provide insight into the three large clients that reduced revenue? - The clients are still engaged but have paused or reduced project scopes due to budget constraints, not due to dissatisfaction with the work [42][43] Question: What is the outlook for positive revenue growth? - Management expects stabilization in Q4, with potential for returning to growth in the future based on demand generation investments [49]

Thoughtworks Q2 2023 | --- | --- | --- | |-----------------------|-------|-------| | | | | | | | | | Investor Presentation | | | | August 8, 2023 | | | | --- ...

Part I [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements for Q2 2023 reflect decreased assets and revenues, a significantly narrowed net loss, and positive operating cash flow, reflecting strategic acquisitions and a structural reorganization [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The balance sheet as of June 30, 2023, shows a decrease in total assets and liabilities, primarily driven by reduced cash and long-term debt, while stockholders' equity slightly increased Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $88,151 | $194,294 | | Total current assets | $414,710 | $556,690 | | Goodwill | $422,313 | $405,017 | | Total assets | $1,327,227 | $1,461,850 | | **Liabilities & Equity** | | | | Total current liabilities | $137,630 | $179,570 | | Long-term debt, less current portion | $289,379 | $391,856 | | Total liabilities | $533,499 | $683,628 | | Total stockholders' equity | $793,728 | $778,222 | [Condensed Consolidated Statements of Loss and Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Loss%20and%20Comprehensive%20Loss) For Q2 2023, revenues decreased, but the company significantly narrowed its net loss due to a sharp reduction in operating expenses, particularly from lower stock-based compensation Financial Performance Summary (in thousands, except per share data) | Metric | Q2 2023 | Q2 2022 | H1 2023 | H1 2022 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $287,215 | $332,107 | $594,271 | $653,047 | | (Loss) income from operations | $(1,623) | $(21,922) | $4,029 | $(61,358) | | Net loss | $(12,272) | $(39,308) | $(20,379) | $(82,893) | | Diluted loss per common share | $(0.04) | $(0.13) | $(0.06) | $(0.27) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the first half of 2023, operating cash flow remained positive but decreased, while significant cash was used in investing activities for an acquisition and in financing activities for debt repayment, leading to an overall decrease in cash Cash Flow Summary for Six Months Ended June 30 (in thousands) | Activity | 2023 | 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $16,247 | $21,477 | | Net cash used in investing activities | $(19,449) | $(77,602) | | Net cash used in financing activities | $(103,039) | $(54,199) | | **Net decrease in cash** | **$(106,063)** | **$(119,208)** | [Notes to the Condensed Consolidated Financial Statements (Unaudited)](index=11&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Key notes detail the acquisition of Itoc Pty Ltd, a significant reduction in stock-based compensation, a voluntary debt prepayment, and a subsequent structural reorganization impacting headcount and incurring charges - On February 1, 2023, the Company acquired Itoc Pty Ltd, an Australian AWS consulting partner, for a gross purchase price of **$17.8 million**[48](index=48&type=chunk) - Stock-based compensation expense decreased significantly to **$17.6 million** for Q2 2023, compared to **$68.9 million** for Q2 2022[64](index=64&type=chunk) - On February 24, 2023, the Company made a voluntary prepayment of **$100.0 million** on its Term Loan[72](index=72&type=chunk) - On August 7, 2023, the Board approved a structural reorganization that will impact approximately **5% to 6%** of the employee headcount and is expected to incur total pre-tax charges of **$20 million to $25 million**[78](index=78&type=chunk)[79](index=79&type=chunk)[80](index=80&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes the Q2 2023 revenue decline to macroeconomic factors and client caution, noting a decrease in net dollar retention rate and adjusted EBITDA margin despite improved gross margin, while maintaining adequate liquidity Key Operational Metrics | Metric | Q2 2023 | Q2 2022 | | :--- | :--- | :--- | | Revenue Growth Rate (as reported) | **(13.5)%** | **27.5%** | | Revenue Growth Rate (constant currency) | **(12.5)%** | **33.5%** | | Adjusted EBITDA Margin | **10.2%** | **17.6%** | - The decrease in revenue was attributed to the continued impact of the macroeconomic environment, slower pipeline conversion, and client budget caution[86](index=86&type=chunk) - Net dollar retention rate decreased to **100%** for the trailing twelve months ended June 30, 2023, down from **124%** for the same period in 2022[95](index=95&type=chunk)[96](index=96&type=chunk) - Bookings for the trailing twelve months ended June 30, 2023, were stable at **$1.5 billion**, the same as the prior year period[111](index=111&type=chunk) [Item 3. Quantitative and Qualitative Disclosure About Market Risk](index=37&type=section&id=Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company states that there were no material changes to its market risk disclosures from its 2022 Annual Report - There were **no material changes** to the information on market risk disclosure from the 2022 Annual Report[154](index=154&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2023, with no material changes in internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that as of June 30, 2023, the company's disclosure controls and procedures are **effective**[156](index=156&type=chunk) - **No changes occurred** during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[157](index=157&type=chunk) Part II. Other Information [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company reports that it is not currently involved in any legal claims or proceedings expected to have a material adverse effect on its business, financial condition, or results of operations - There are currently **no claims or proceedings** against the company that are believed to have a material adverse effect on its business[160](index=160&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) The company states there have been no material changes to its risk factors since the 2022 Annual Report, with the exception of a newly detailed risk concerning the challenges in implementing its strategy and potential disruptions from restructuring actions - A **new risk factor** was added concerning the company's ability to implement its strategy, including cost and efficiency initiatives, noting that restructuring actions may not be successful and could be disruptive[161](index=161&type=chunk)[162](index=162&type=chunk)[163](index=163&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=40&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of its equity securities during the second quarter of 2023 - There were **no unregistered sales** of the Company's equity securities during the second quarter of 2023[164](index=164&type=chunk) [Item 5. Other Information](index=40&type=section&id=Item%205.%20Other%20Information) In connection with its structural reorganization, **Christopher Murphy** was appointed Chief Revenue and Client Officer, **Sudhir Tiwari** as Global Head of the Digital Engineering Center, the **Chief Commercial Officer role was eliminated**, and CTO Emerita **Rebecca Parsons** adopted a **Rule 10b5-1 trading plan** - As part of a reorganization, **Christopher Murphy** was appointed Chief Revenue and Client Officer, and **Sudhir Tiwari** was appointed Global Head of the Digital Engineering Center[167](index=167&type=chunk) - The **Chief Commercial Officer role was eliminated**, and the incumbent, **Sai Mandapaty**, will transition out of the company[167](index=167&type=chunk) - CTO Emerita **Rebecca Parsons** adopted a **Rule 10b5-1 trading plan** on May 17, 2023, to sell up to **17,507 shares**[167](index=167&type=chunk) [Item 6. Exhibits](index=42&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including amendments to credit agreements, certifications by the CEO and CFO, and Inline XBRL data files

Thoughtworks Holding, Inc. (NASDAQ:TWKS) Q1 2023 Earnings Conference Call May 9, 2023 8:00 AM ET Corporate Participants Rob Muller - Global Head of Investor Relations Guo Xiao - President and Chief Executive Officer Erin Cummins - Chief Financial Officer Conference Call Participants Tien-tsin Huang - JPMorgan Maggie Nolan - William Blair Matthew Roswell - RBC David Koning - Baird Bryan Bergin - Cowen Moshe Katri - Wedbush Securities Ryan Potter - Citi Jason Kupferberg - Bank of America Rob Muller Hello, eve ...

[Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section identifies forward-looking statements, highlighting risks and uncertainties that could cause actual results to differ materially [Summary of Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements_Summary) This section identifies forward-looking statements, highlighting risks and uncertainties that could cause actual results to differ materially - Forward-looking statements are identified by terms such as 'anticipate,' 'believe,' 'expect,' and relate to future operations, client demand, business strategies, and the macroeconomic environment[9](index=9&type=chunk) - Actual results may differ materially due to known and unknown risks, uncertainties, and other factors, including volatile economic conditions, foreign currency fluctuations, and increased compensation expenses[10](index=10&type=chunk)[11](index=11&type=chunk) - The company does not undertake to update or revise any forward-looking statement unless required by law[14](index=14&type=chunk) [Part I. Financial Information](index=5&type=section&id=Part%20I.%20Financial%20Information) This part presents unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents unaudited condensed consolidated financial statements, including Balance Sheets, Statements of Loss, and Cash Flows [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of the company's financial position as of March 31, 2023, and December 31, 2022 Balance Sheet Highlights | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | | :-------------------------------- | :----------------------------- | :------------------------------ | | Cash and cash equivalents | $109,268 | $194,294 | | Total current assets | $439,300 | $556,690 | | Total assets | $1,360,697 | $1,461,850 | | Total current liabilities | $165,124 | $179,570 | | Long-term debt, less current portion | $291,053 | $391,856 | | Total liabilities | $572,840 | $683,628 | | Total stockholders' equity | $787,857 | $778,222 | [Condensed Consolidated Statements of Loss and Comprehensive Loss](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Loss%20and%20Comprehensive%20Loss) This section details the company's financial performance, including revenues, operating expenses, and net loss for the period Statements of Loss and Comprehensive Loss Highlights | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Revenues | $307,056 | $320,940 | | Total operating expenses | $301,404 | $360,376 | | Income (loss) from operations | $5,652 | $(39,436) | | Total other (expense) income | $(6,400) | $179 | | Loss before income taxes | $(748) | $(39,257) | | Income tax expense | $7,359 | $4,328 | | Net loss | $(8,107) | $(43,585) | | Basic loss per common share | $(0.03) | $(0.14) | | Diluted loss per common share | $(0.03) | $(0.14) | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section outlines changes in stockholders' equity, including common stock, additional paid-in capital, and retained deficit Stockholders' Equity Changes | Metric | December 31, 2022 (in thousands) | March 31, 2023 (in thousands) | | :-------------------------------- | :------------------------------- | :------------------------------ | | Common Stock Amount | $366 | $367 | | Treasury Stock Amount | $(624,934) | $(624,775) | | Additional Paid-In Capital | $1,565,514 | $1,582,854 | | Accumulated Other Comprehensive Loss | $(39,210) | $(38,968) | | Retained Deficit | $(123,514) | $(131,621) | | Total Stockholders' Equity | $778,222 | $787,857 | - Net loss for the three months ended March 31, 2023, was **$(8,107) thousand**[21](index=21&type=chunk) - Stock-based compensation expense for the period was **$17,679 thousand**[21](index=21&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents cash flows from operating, investing, and financing activities for the three months ended March 31, 2023 Cash Flow Summary | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Net cash provided by (used in) operating activities | $33,047 | $(6,095) | | Net cash used in investing activities | $(17,555) | $(4,998) | | Net cash used in financing activities | $(102,041) | $(29,792) | | Net decrease in cash, cash equivalents and restricted cash | $(85,001) | $(40,703) | | Cash, cash equivalents and restricted cash at end of period | $110,563 | $354,239 | - Interest paid increased to **$6,645 thousand** in Q1 2023 from **$4,355 thousand** in Q1 2022[23](index=23&type=chunk) - Income taxes paid increased to **$6,856 thousand** in Q1 2023 from **$2,383 thousand** in Q1 2022[23](index=23&type=chunk) [Notes to the Condensed Consolidated Financial Statements (Unaudited)](index=11&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section provides detailed explanations supporting the financial statements, covering business, accounting policies, revenue, and acquisitions [Note 1 – Business and Summary of Significant Accounting Policies](index=11&type=section&id=Note%201%20%E2%80%93%20Business%20and%20Summary%20of%20Significant%20Accounting%20Policies) This note describes Thoughtworks' global technology consultancy business and outlines significant accounting policies, including a policy change - Thoughtworks Holding, Inc. is a global technology consultancy providing enterprise application software development, implementation, and business technology consulting across **18 countries**[27](index=27&type=chunk) - The company retrospectively changed its stock-based compensation policy for graded vesting awards from accelerated to straight-line attribution, decreasing net loss by **$16.3 million** and basic/diluted loss per share by **$0.06** for Q1 2022[38](index=38&type=chunk) - Revenue from operations outside the United States accounted for **66%** and **63%** for the three months ended March 31, 2023 and 2022, respectively[36](index=36&type=chunk) [Note 2 – Revenue Recognition](index=13&type=section&id=Note%202%20%E2%80%93%20Revenue%20Recognition) This note details revenue recognition policies, disaggregating revenues by geographic location, industry vertical, and contract type - The company disaggregates revenues from contracts with customers by geographic customer location, industry vertical, and contract type (predominantly time-and-materials)[39](index=39&type=chunk) Revenue by Geographic Location | Geographic Location | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------ | :-------------------------------- | :-------------------------------- | | North America | $112,314 | $121,949 | | APAC | $100,162 | $102,206 | | Europe | $83,050 | $82,926 | | LATAM | $11,530 | $13,859 | | Total revenues | $307,056 | $320,940 | Revenue by Industry Vertical | Industry Vertical | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------ | :-------------------------------- | :-------------------------------- | | Technology and business services | $74,133 | $85,349 | | Energy, public and health services | $84,039 | $77,110 | | Retail and consumer | $47,912 | $62,435 | | Financial services and insurance | $55,155 | $58,464 | | Automotive, travel and transportation | $45,817 | $37,582 | | Total revenues | $307,056 | $320,940 | Revenue by Contract Type | Contract Type | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------ | :-------------------------------- | :-------------------------------- | | Time-and-material | $257,250 | $271,363 | | Fixed-price | $49,806 | $49,577 | | Total revenues | $307,056 | $320,940 | [Note 3 – Acquisitions](index=15&type=section&id=Note%203%20%E2%80%93%20Acquisitions) This note details recent acquisitions, including ITOC Pty Ltd, and associated goodwill, intangible assets, and contingent consideration - On February 1, 2023, Thoughtworks acquired ITOC Pty Ltd ('Itoc') for **$17.8 million** (gross purchase price), expanding its cloud modernization capabilities in Australia[51](index=51&type=chunk) - The acquisition resulted in **$13.8 million** in goodwill and **$3.5 million** in customer relationships, net[53](index=53&type=chunk) - Acquisition-related costs for Itoc totaled **$1.1 million** for Q1 2023, included in SG&A expenses[53](index=53&type=chunk) - A contingent consideration liability of **$14.3 million** related to the Connected Lab Inc. acquisition (Q2 2022) was paid on May 4, 2023[57](index=57&type=chunk) [Note 4 – Goodwill and Other Intangible Assets](index=16&type=section&id=Note%204%20%E2%80%93%20Goodwill%20and%20Other%20Intangible%20Assets) This note details changes in goodwill and other intangible assets, including additions from acquisitions and amortization expense Goodwill Movement | Metric | Amount | | :-------------------------- | :------- | | Balance as of Dec 31, 2022 | $405,017 | | Additions due to acquisitions | $13,766 | | Changes due to exchange rates | $1,611 | | Balance as of Mar 31, 2023 | $420,394 | - Amortization expense for finite-lived intangible assets was **$3.6 million** for Q1 2023, up from **$3.0 million** in Q1 2022[59](index=59&type=chunk) - The weighted average remaining useful life of finite-lived intangible assets was **8.8 years** as of March 31, 2023[61](index=61&type=chunk) [Note 5 – Income Taxes](index=17&type=section&id=Note%205%20%E2%80%93%20Income%20Taxes) This note explains income tax expense and effective tax rate, highlighting factors like U.S. state taxation and valuation allowances - The effective tax rate for Q1 2023 was **(983.8)%** compared to **(11.0)%** for Q1 2022, primarily due to U.S. corporate state income taxation, foreign operations' tax rates, valuation allowances, non-deductibility of China SAFE RSUs, and capitalized R&E costs under IRC §174[63](index=63&type=chunk) - The company computes the effective tax rate using actual results for interim periods due to high sensitivity of forecasted pre-tax income to minor changes[62](index=62&type=chunk) [Note 6 – Loss Per Share](index=17&type=section&id=Note%206%20%E2%80%93%20Loss%20Per%20Share) This note presents basic and diluted loss per common share calculations, including net loss and weighted average shares outstanding Loss Per Share Details | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Net loss – Basic and diluted | $(8,107) | $(43,585) | | Weighted average shares outstanding – Basic and diluted | 316,451,601 | 306,189,816 | | Basic and diluted loss per share | $(0.03) | $(0.14) | - Potentially dilutive securities (stock options, RSUs, PSUs) totaling **20,285,106** for Q1 2023 were excluded from diluted EPS calculation as they were anti-dilutive[64](index=64&type=chunk) [Note 7 – Stock-Based Compensation](index=18&type=section&id=Note%207%20%E2%80%93%20Stock-Based%20Compensation) This note details stock-based compensation expense and unrecognized compensation costs for various equity awards Stock-Based Compensation Expense | Category | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Cost of revenues | $10,530 | $69,909 | | Selling, general and administrative expenses | $7,149 | $30,274 | | Total stock-based compensation expense | $17,679 | $100,183 | - Unrecognized compensation cost for time vesting options was **$6.1 million**, to be recognized over a weighted-average period of **1.8 years**[66](index=66&type=chunk) - Unrecognized compensation cost for RSUs was **$131.6 million**, with **$30.1 million** non-recurring (IPO-related) and **$101.5 million** recurring (annual grant), to be recognized over a weighted-average period of **2.5 years**[69](index=69&type=chunk) - Unrecognized compensation cost for PSUs was **$9.6 million**, to be recognized over a weighted-average period of **2.5 years**[71](index=71&type=chunk) [Note 8 – Credit Agreements](index=19&type=section&id=Note%208%20%E2%80%93%20Credit%20Agreements) This note outlines senior secured credit facilities, including the Term Loan and Revolver, and details a voluntary prepayment - The company has a senior secured Term Loan of **$715.0 million** and a Revolver of **$300.0 million**[72](index=72&type=chunk) - On February 24, 2023, a voluntary prepayment of **$100.0 million** was made on the Term Loan, resulting in a **$0.9 million** write-off of deferred financing fees[73](index=73&type=chunk)[74](index=74&type=chunk) Credit Facilities Summary | Metric | March 31, 2023 | December 31, 2022 | | :------------------------------------ | :------------- | :---------------- | | Availability under Revolver | $300,000 | $300,000 | | Borrowings under Revolver | $0 | $0 | | Long-term debt (incl. current portion) | $298,203 | $399,006 | | Interest rate | 7.3% | 6.9% | [Note 9 – Accrued Expenses](index=20&type=section&id=Note%209%20%E2%80%93%20Accrued%20Expenses) This note provides a breakdown of accrued expenses, including compensation, professional fees, and contingent consideration Accrued Expenses Breakdown | Accrued Expense Category | March 31, 2023 | December 31, 2022 | | :----------------------- | :------------- | :---------------- | | Accrued compensation | $73,536 | $85,477 | | Professional fees | $5,528 | $6,321 | | Contingent consideration | $14,267 | $14,255 | | Total Accrued Expenses | $27,848 | $30,227 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on financial condition and results, discussing key metrics, revenue trends, and liquidity [Overview](index=21&type=section&id=Overview) This section describes Thoughtworks as a global technology consultancy, its employee base, geographic presence, and professional services - Thoughtworks is a global technology consultancy with **11,840 employees** across **51 offices** in **18 countries**, specializing in digital innovation through strategy, design, and engineering[79](index=79&type=chunk) - Revenues are generated from professional services, including enterprise modernization, customer experience, data & AI, digital application management, and digital transformation[80](index=80&type=chunk) [Key Operational and Business Metrics](index=21&type=section&id=Key%20Operational%20and%20Business%20Metrics) This section presents key financial and operational metrics, including revenues, net loss, and Adjusted EBITDA, with year-over-year changes Operational and Business Metrics | Metric | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | Change (YoY) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | :----------- | | Revenues | $307,056 | $320,940 | (4.3)% | | Revenue Growth Rate as reported | (4.3)% | 35.0% | -39.3 pp | | Revenue Growth Rate at constant currency | (0.9)% | 38.2% | -39.1 pp | | Net loss | $(8,107) | $(43,585) | +$35,478 | | Net loss margin | (2.6)% | (13.6)% | +11.0 pp | | Adjusted Net Income | $10,067 | $43,992 | -$33,925 | | Adjusted EBITDA | $34,900 | $72,872 | -$37,972 | | Adjusted EBITDA Margin | 11.4% | 22.7% | -11.3 pp | - The decrease in reported revenue (**4.3%**) and constant currency revenue (**0.9%**) was negatively impacted by the appreciation of the U.S. dollar against certain principal functional currencies of subsidiaries[83](index=83&type=chunk) - The decrease in net loss and improvement in net loss margin were driven by a significant decrease in stock-based compensation expense (**$82.5 million**), partially offset by increased payroll expense and decreased revenue[84](index=84&type=chunk) - Adjusted EBITDA decreased by **52.1%** due to higher operating expenses (increased payroll, severance) and decreased revenue, leading to a lower Adjusted EBITDA Margin[86](index=86&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, examining revenue trends, cost of revenues, gross profit, and operating expenses [Revenues](index=23&type=section&id=Revenues_Results) This section analyzes revenue performance, including total revenue changes, client growth, net dollar retention, and disaggregation by industry and region - Total revenues decreased by **4.3%** to **$307.1 million** in Q1 2023 from **$320.9 million** in Q1 2022[88](index=88&type=chunk) - The number of clients increased to **442** (from **384**), and clients generating over **$10 million** in revenue increased to **39** (from **31**) for the trailing twelve months ended March 31, 2023[91](index=91&type=chunk) - Net dollar retention rate decreased to **106%** in Q1 2023 from **132%** in Q1 2022, primarily due to project pauses and slower engagement growth from client budgetary pressures, particularly in the APAC region and retail and consumer and technology and business services verticals[92](index=92&type=chunk) - Existing clients accounted for **97.2%** of revenues in Q1 2023 (vs. **95.4%** in Q1 2022), while new clients contributed **2.8%** (vs. **4.6%**)[93](index=93&type=chunk) - **47 new logos** were contracted in Q1 2023, with a higher concentration within the energy, public and health services and financial services and insurance industry verticals[94](index=94&type=chunk) Revenue by Industry Vertical | Industry Vertical | Q1 2023 Revenue | Q1 2023 % of Total | Q1 2022 Revenue | Q1 2022 % of Total | YoY Change | | :------------------------------ | :---------------- | :----------------- | :---------------- | :----------------- | :--------- | | Technology and business services | $74,133 | 24.1% | $85,349 | 26.6% | (13.1)% | | Energy, public and health services | $84,039 | 27.4% | $77,110 | 24.0% | 9.0% | | Retail and consumer | $47,912 | 15.6% | $62,435 | 19.5% | (23.3)% | | Financial services and insurance | $55,155 | 18.0% | $58,464 | 18.2% | (5.7)% | | Automotive, travel and transportation | $45,817 | 14.9% | $37,582 | 11.7% | 21.9% | - Decreases in retail & consumer, technology & business services, and financial services & insurance were due to client budgetary pressures[95](index=95&type=chunk) - Growth in automotive, travel & transportation was driven by customer experience, product & design, while energy, public & health services grew due to enterprise modernization, platforms & cloud[95](index=95&type=chunk)[96](index=96&type=chunk) Revenue by Geographic Location | Geographic Location | Q1 2023 Revenue | Q1 2023 % of Total | Q1 2022 Revenue | Q1 2022 % of Total | YoY Change | | :------------------ | :---------------- | :----------------- | :---------------- | :----------------- | :--------- | | North America | $112,314 | 36.6% | $121,949 | 38.0% | (7.9)% | | APAC | $100,162 | 32.6% | $102,206 | 31.9% | (2.0)% | | Europe | $83,050 | 27.0% | $82,926 | 25.8% | 0.1% | | LATAM | $11,530 | 3.8% | $13,859 | 4.3% | (16.8)% | - North America revenue decreased by **7.9%**, with the United States contributing **$108.4 million**[98](index=98&type=chunk) - APAC revenue decreased by **2.0%**, with Australia contributing **$29.0 million**, impacted by USD strengthening against the Australian Dollar[99](index=99&type=chunk) - Europe revenue grew by **0.1%**, with the United Kingdom contributing **$35.1 million**, negatively impacted by USD strengthening against the Euro and Great British Pound[100](index=100&type=chunk) - LATAM revenue decreased by **16.8%**, with Brazil being the largest customer location[101](index=101&type=chunk) Revenue by Client Group | Client Group | Q1 2023 Revenue | Q1 2023 % of Total | Q1 2022 Revenue | Q1 2022 % of Total | | :------------- | :---------------- | :----------------- | :---------------- | :----------------- | | Top five clients | $52,590 | 17.1% | $48,120 | 15.0% | | Top ten clients | $82,558 | 26.9% | $83,031 | 25.9% | | Top fifty clients | $206,577 | 67.3% | $212,012 | 66.1% | [People Metrics](index=26&type=section&id=People%20Metrics) This section presents key human capital metrics, including employee count, average revenue per employee, and voluntary attrition rates Employee and Revenue Metrics | Metric | March 31, 2023 | March 31, 2022 | | :------------------------------------ | :------------- | :------------- | | Number of employees | 11,840 | 11,278 | | Average revenue per employee (Q1) | $25,000 | $29,000 | | Annualized average revenue per employee | $100,000 | $116,000 | | Trailing Twelve Months Voluntary Attrition | 13.1% | 14.1% | - The decrease in average revenue per employee was driven by the negative impact from foreign currency translation, geographic mix, and decreased utilization[105](index=105&type=chunk) - Voluntary attrition decreased, indicating higher retention, attributed to technology industry hiring trends, company culture, career development, and work opportunities[105](index=105&type=chunk) [Bookings](index=26&type=section&id=Bookings) This section defines bookings as a forward-looking metric for new contract value, renewals, and extensions, noting stable bookings - Bookings were **$1.5 billion** for both the trailing twelve months ended March 31, 2023, and March 31, 2022, indicating stable new contract value[106](index=106&type=chunk) - Bookings measure the value of new contracts, renewals, extensions, and changes to existing contracts, serving as a forward-looking metric for business volume trends[106](index=106&type=chunk) [Cost of Revenues](index=26&type=section&id=Cost%20of%20Revenues) This section analyzes changes in cost of revenues, primarily driven by fluctuations in stock-based compensation and payroll expenses Cost of Revenues Summary | Metric | Q1 2023 | Q1 2022 | % Change | | :-------------- | :-------- | :-------- | :------- | | Cost of revenues | $209,522 | $249,765 | (16.1)% | - The **16.1%** decrease in cost of revenues was primarily driven by a **$59.4 million** decrease in stock-based compensation expense, partially offset by an **$18.1 million** increase in payroll expense (excluding stock-based compensation) due to higher headcount and severance expense[107](index=107&type=chunk) [Gross Profit and Gross Margin](index=27&type=section&id=Gross%20Profit%20and%20Gross%20Margin) This section discusses gross profit and gross margin, highlighting the impact of stock-based compensation and payroll expenses on profitability Gross Profit and Margin | Metric | Q1 2023 | Q1 2022 | % Change | | :---------- | :-------- | :-------- | :------- | | Gross profit | $97,534 | $71,175 | 37.0% | | Gross margin | 31.8% | 22.2% | +9.6 pp | - Gross margin increased by **9.6 percentage points**, mainly due to a **$59.4 million** decrease in stock-based compensation, partially offset by increased payroll expense and decreased utilization[108](index=108&type=chunk) [SG&A Expenses and SG&A Margin](index=27&type=section&id=SG%26A%20Expenses%20and%20SG%26A%20Margin) This section details changes in selling, general, and administrative expenses and their impact on the SG&A margin SG&A Expenses and Margin | Metric | Q1 2023 | Q1 2022 | % Change | | :------------ | :-------- | :-------- | :------- | | SG&A expenses | $86,340 | $104,765 | (17.6)% | | SG&A margin | 28.1% | 32.6% | -4.5 pp | - SG&A expenses decreased by **17.6%**, primarily due to a **$23.1 million** decrease in stock-based compensation expense[109](index=109&type=chunk) [Depreciation and Amortization](index=27&type=section&id=Depreciation%20and%20Amortization) This section reports on depreciation and amortization expenses, noting no material changes for the periods presented Depreciation and Amortization Expense | Metric | Q1 2023 | Q1 2022 | % Change | | :-------------------------- | :-------- | :-------- | :------- | | Depreciation and amortization | $5,542 | $5,846 | (5.2)% | - There was not a material change in depreciation and amortization for the three months ended March 31, 2023 as compared to the three months ended March 31, 2022[110](index=110&type=chunk) [Income (Loss) from Operations and Income (Loss) from Operations Margin](index=27&type=section&id=Income%20(Loss)%20from%20Operations%20and%20Income%20(Loss)%20from%20Operations%20Margin) This section analyzes operating income or loss and its margin, attributing changes to stock-based compensation, payroll, and revenue Operating Income (Loss) and Margin | Metric | Q1 2023 | Q1 2022 | % Change | | :-------------------------------- | :-------- | :-------- | :------- | | Income (loss) from operations | $5,652 | $(39,436) | (114.3)% | | Income (loss) from operations margin | 1.8% | (12.3)% | +14.1 pp | - The increase in income from operations was primarily driven by an **$82.5 million** decrease in stock-based compensation expense (including **$46.7 million** related to the approval of China SAFE during the first quarter of 2022), partially offset by a **$19.2 million** increase in payroll expense (including severance) and a **$13.9 million** decrease in revenues due to lower utilization[111](index=111&type=chunk) [Interest Expense](index=28&type=section&id=Interest%20Expense) This section discusses the increase in interest expense, primarily due to higher interest rates on borrowings, partially offset by prepayments Interest Expense Summary | Metric | Q1 2023 | Q1 2022 | % Change | | :--------------- | :-------- | :-------- | :------- | | Interest expense | $6,862 | $4,647 | 47.7% | - Interest expense increased by **47.7%** due to higher interest rates on borrowings, partially offset by decreased borrowings from prepayments[112](index=112&type=chunk) [Income Tax Expense and Effective Tax Rate](index=28&type=section&id=Income%20Tax%20Expense%20and%20Effective%20Tax%20Rate) This section explains changes in income tax expense and the effective tax rate, influenced by tax deficiencies and valuation allowances Income Tax Expense and Rate | Metric | Q1 2023 | Q1 2022 | % Change | | :------------------ | :-------- | :-------- | :------- | | Income tax expense | $7,359 | $4,328 | 70.0% | | Effective tax rate | NM | (11.0)% | | - Income tax expense increased by **$3.0 million** due to the unfavorable impact of excess tax deficiencies on stock-based compensation and provision for uncertain income tax positions, offset by valuation allowances on deferred tax assets of select foreign operations and net GILTI inclusion[114](index=114&type=chunk) - The effective tax rate was not meaningful (NM) for Q1 2023 and negative **(11.0)%** for Q1 2022, primarily due to U.S. state income taxation, foreign operations' tax rates, valuation allowances, non-deductibility of China SAFE RSUs, and capitalized R&E costs[115](index=115&type=chunk) [Foreign Currency Exchange Gains and Losses](index=28&type=section&id=Foreign%20Currency%20Exchange%20Gains%20and%20Losses) This section refers to other report parts for detailed disclosures on foreign currency rate fluctuations and their impact - The report refers to 'Item 3. Quantitative and Qualitative Disclosures About Market Risk' and 'Item 1A. Risk Factors' for details on foreign currency rate fluctuations[116](index=116&type=chunk) [Non-GAAP Financial Measures](index=28&type=section&id=Non-GAAP%20Financial%20Measures) This section defines and reconciles non-GAAP financial measures like Adjusted Net Income and Adjusted EBITDA, explaining their utility - Adjusted Net Income is defined as net loss adjusted for unrealized gain on foreign currency exchange, stock-based compensation expense, amortization of acquisition-related intangibles, acquisition costs, certain professional fees, employer payroll related expense on employee equity incentive plan, and income tax effects of adjustments[117](index=117&type=chunk) - Adjusted EBITDA is defined as net loss adjusted for income tax expense, interest expense, other expense (income), net, unrealized gain on foreign currency exchange, stock-based compensation expense, depreciation and amortization expense, acquisition costs, certain professional fees, and employer payroll related expense on employee equity incentive plan[118](index=118&type=chunk)[119](index=119&type=chunk) - These non-GAAP measures are used by management and investors to assess operating performance, leverage, and for planning, budgeting, and comparison purposes, but have limitations as analytical tools[120](index=120&type=chunk)[121](index=121&type=chunk) Non-GAAP Financial Measures Reconciliation | Metric | Q1 2023 | Q1 2022 | | :------------------------------------ | :-------- | :-------- | | Net loss | $(8,107) | $(43,585) | | Unrealized foreign exchange gain | $(948) | $(5,640) | | Stock-based compensation | $17,679 | $100,183 | | Amortization of acquisition-related intangibles | $3,591 | $2,992 | | Acquisition costs | $1,706 | $20 | | Certain professional fees | $225 | $803 | | Employer payroll related expense on employee equity incentive plan | $242 | $3,622 | | Income tax effects of adjustments | $(4,321) | $(14,403) | | **Adjusted Net Income** | **$10,067** | **$43,992** | | Income tax expense | $7,359 | $4,328 | | Interest expense | $6,862 | $4,647 | | Other expense (income), net | $793 | $(88) | | Depreciation and amortization | $9,089 | $8,582 | | **Adjusted EBITDA** | **$34,900** | **$72,872** | | Net loss margin | (2.6)% | (13.6)% | | **Adjusted EBITDA Margin** | **11.4%** | **22.7%** | [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's liquidity position, including cash, credit facilities, cash flow activities, and future capital requirements Liquidity and Debt Overview | Metric | March 31, 2023 | December 31, 2022 | | :------------------------------------ | :------------- | :---------------- | | Cash and cash equivalents | $109,268 | $194,294 | | Availability under Revolver | $300,000 | $300,000 | | Borrowings under Revolver | $0 | $0 | | Long-term debt, including current portion | $298,203 | $399,006 | - Primary liquidity sources are cash generated from operations and financing activities, used for technology solutions, corporate infrastructure, and strategic acquisitions[125](index=125&type=chunk) - The company believes existing cash and expected operating cash flow will be sufficient for at least the next twelve months, with financial flexibility for acquisitions and strategic investments[137](index=137&type=chunk) [Our Credit Facilities](index=31&type=section&id=Our%20Credit%20Facilities) This section details outstanding debt under the Term Loan and Revolver, confirming compliance with debt covenants - As of March 31, 2023, the company had **$300.7 million** outstanding under its Term Loan at a **7.30%** interest rate and **no borrowings** outstanding under the Revolver[128](index=128&type=chunk) - The company was in compliance with all debt covenants as of March 31, 2023[129](index=129&type=chunk) [Cash Flows](index=31&type=section&id=Cash%20Flows_Liquidity) This section analyzes net cash provided by or used in operating, investing, and financing activities, highlighting key drivers Cash Flow Activities Summary | Activity | Three Months Ended March 31, 2023 | Three Months Ended March 31, 2022 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | Operating activities | $33,047 | $(6,095) | | Investing activities | $(17,555) | $(4,998) | | Financing activities | $(102,041) | $(29,792) | | Effect of exchange rate changes | $1,548 | $182 | | Net decrease in cash and cash equivalents | $(85,001) | $(40,703) | - Net cash provided by operating activities increased to **$33.0 million** (from cash used of **$6.1 million** in Q1 2022), primarily due to decreased trade receivables and lower accruals from IPO-related expense payments in Q1 2022[131](index=131&type=chunk) - Net cash used in investing activities increased to **$17.6 million** (from **$5.0 million** in Q1 2022), mainly due to the Itoc acquisition in Q1 2023[132](index=132&type=chunk) - Net cash used in financing activities was **$102.0 million**, driven by **$101.8 million** in long-term debt repayment. In Q1 2022, it was **$29.8 million**, driven by withholding taxes for equity awards, tender offer, and dividends[133](index=133&type=chunk) [Contractual Obligations and Future Capital Requirements](index=32&type=section&id=Contractual%20Obligations%20and%20Future%20Capital%20Requirements) This section addresses contractual obligations, including contingent consideration, and discusses potential needs for additional funding - A **$14.3 million** contingent consideration liability for the Connected acquisition was paid on May 4, 2023[134](index=134&type=chunk) - No other material changes to contractual obligations since the 2022 Annual Report[135](index=135&type=chunk) - The company may need to raise additional funds through equity or debt financing if existing liquidity is insufficient, which could dilute stockholders or restrict operations[137](index=137&type=chunk) [Commitments and Contingencies](index=33&type=section&id=Commitments%20and%20Contingencies) This section outlines policies for recording loss contingencies and confirms no current claims are expected to have a material adverse effect - The company records liabilities for loss contingencies when probable and estimable, and legal costs are expensed as incurred[139](index=139&type=chunk) - Currently, there are no claims or proceedings expected to have a material adverse effect on the business[153](index=153&type=chunk) [Off-Balance Sheet Arrangements](index=33&type=section&id=Off-Balance%20Sheet%20Arrangements) This section confirms the absence of off-balance sheet financing arrangements or relationships with unconsolidated entities - The company had no off-balance sheet financing arrangements or relationships with unconsolidated entities during the periods presented[140](index=140&type=chunk) [Recent Accounting Pronouncements](index=33&type=section&id=Recent%20Accounting%20Pronouncements) This section discusses the impact of recent accounting pronouncements, including ASU 2021-08 and ASU 2020-04 - The adoption of ASU 2021-08 (business combinations) did not materially impact the financial statements[34](index=34&type=chunk) - The company is currently assessing the impact of ASU 2020-04 (Reference Rate Reform) on its consolidated financial statements[35](index=35&type=chunk) [Critical Accounting Policies and Estimates](index=33&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) This section states no material changes to critical accounting policies and estimates since the previous annual report - No material changes to critical accounting policies and estimates compared to those described in the 2022 Annual Report[143](index=143&type=chunk) [Item 3. Quantitative and Qualitative Disclosure About Market Risk](index=33&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) This section addresses market risks, including credit concentration, interest rates, and foreign currency, noting no material changes - The company is exposed to market risks from changes in credit concentration, interest rates, and foreign currency exchange rates, as well as risks from international operations[144](index=144&type=chunk) - No material changes to market risk disclosure from the 2022 Annual Report[145](index=145&type=chunk) [Item 4. Controls and Procedures](index=33&type=section&id=Item%204.%20Controls%20and%20Procedures) This section details management's evaluation of disclosure controls and internal control over financial reporting, noting no material changes [Evaluation of Disclosure Controls and Procedures](index=33&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) This section confirms management's conclusion that disclosure controls and procedures were effective as of March 31, 2023 - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2023, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[148](index=148&type=chunk) [Changes in Internal Control Over Financial Reporting](index=34&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) This section states no material changes occurred in internal control over financial reporting during the period - There were no changes in internal control over financial reporting during the period that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[149](index=149&type=chunk) [Limitations on the Effectiveness of Controls and Procedures](index=34&type=section&id=Limitations%20on%20the%20Effectiveness%20of%20Controls%20and%20Procedures) This section acknowledges inherent limitations of control systems, providing reasonable, not absolute, assurance of achieving objectives - Management acknowledges that any control system, no matter how well designed, can only provide reasonable, not absolute, assurance of achieving control objectives due to inherent limitations like resource constraints and the need for judgment[150](index=150&type=chunk) [Part II. Other Information](index=35&type=section&id=Part%20II.%20Other%20Information) This part contains additional information not covered in Part I, including legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=35&type=section&id=Item%201.%20Legal%20Proceedings) This section states the company is involved in litigation but expects no material adverse effect on its business or financial condition - The company is involved in various litigations (intellectual property, data privacy, contract, employment, etc.) but currently has no claims expected to materially adversely affect its business, financial condition, results of operations, or cash flows[153](index=153&type=chunk) [Item 1A. Risk Factors](index=35&type=section&id=Item%201A.%20Risk%20Factors) This section refers to risk factors in the 2022 Annual Report, noting no material changes affecting the company's business - No material changes to the company's risk factors since those set forth in the 2022 Annual Report[154](index=154&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section confirms no unregistered sales of the company's equity securities occurred during the first quarter of 2023 - No unregistered sales of the Company's equity securities occurred during the first quarter of 2023[155](index=155&type=chunk) [Item 3. Defaults Upon Senior Securities](index=35&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities - No defaults upon senior securities[156](index=156&type=chunk) [Item 4. Mine Safety Disclosures](index=35&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the company - Mine Safety Disclosures are not applicable[157](index=157&type=chunk) [Item 5. Other Information](index=35&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report - No other information to report[158](index=158&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including various agreements and certifications - The report includes exhibits such as Performance Share Unit Agreement, Employment Agreements, and certifications from the CEO and CFO[160](index=160&type=chunk) [Signatures](index=37&type=section&id=Signatures) This section contains required signatures from the CEO and CFO, certifying the report's submission - The report is signed by Guo Xiao, Chief Executive Officer and Director, and Erin Cummins, Chief Financial Officer, on May 9, 2023[163](index=163&type=chunk)

Thoughtworks Holding, Inc. (NASDAQ:TWKS) Q4 2022 Earnings Conference Call February 28, 2023 8:00 AM ET Company Participants Robert Muller - Global Head of Investor Relations Guo Xiao - President and Chief Executive Officer Erin Cummins - Chief Financial Officer Conference Call Participants Tien-Tsin Huang - JPMorgan Maggie Nolan - William Blair Bryan Bergin - Cowen and Company Tyler DuPont - Bank of America Moshe Katri - Wedbush Securities Arvind Ramnani - Piper Sandler Robert Muller Hello, everyone, and ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For transition period from ____ to ____ Commission File Number 001-40812 THOUGHTWORKS HOLDING, INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorpo ...

Thoughtworks Holding, Inc. (NASDAQ:TWKS) Q3 2022 Earnings Conference Call November 14, 2022 8:00 AM ET Company Participants Guo Xiao – Chief Executive Officer and President Erin Cummins – Chief Financial Officer Conference Call Participants Tien-Tsin Huang – JPMorgan Bryan Bergin – Cowen Jason Kupferberg – Bank of America David Koning – RW Baird Moshe Katri – Wedbush Arvind Ramnani – Piper Sandler Dan Perlin – RBC Capital Markets Unidentified Company Representative Hello, everyone, and welcome to Thoughtwor ...