Thoughtworks(US:TWKS)2023-11-07 12:09Financial 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].