Thoughtworks(US:TWKS)2022-05-09 18:34Financial Data and Key Metrics Changes - The company reported revenue of $321 million for Q1 2022, reflecting a year-on-year growth of 35% and 38.2% in constant currency [3][11] - Adjusted EBITDA for the quarter was $73 million, representing a growth of 35.4% compared to Q1 2021 [11][14] - The adjusted EBITDA margin was 22.7%, consistent with the previous year [14] - Negative free cash flow for the quarter was $11.2 million, compared to positive free cash flow of $24.2 million in the prior year quarter [15] Business Line Data and Key Metrics Changes - The strongest growth was seen in financial services, which grew by 70.7%, followed by retail and consumer at 51.8% [13] - Technology and business services grew at 28.9%, while energy, public, and health grew at 21.1% [13] - The company contracted with 52 new clients in Q1 2022, indicating a positive momentum in client acquisition [8][64] Market Data and Key Metrics Changes - Revenue growth in the Asia Pacific region was 40.8%, North America 35.8%, Europe 29.3%, and LATAM 24.2% [12] - The company has established a strong pipeline with $1.5 billion in bookings over the trailing 12 months, a 39.6% increase year-on-year [12][64] Company Strategy and Development Direction - The company is focused on deepening relationships with existing clients and winning new logos, supplemented by strategies around partnerships, M&A, and geographic expansion [5][6] - The acquisition of Connected aims to enhance capabilities in customer experience, design, and product development [6][34] - The company plans to expand into Vietnam to tap into the local technology talent market [6] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in sustaining growth due to strong demand for digital transformation services, with expectations for revenue growth in Q2 2022 to be in the range of $328 million to $329 million [25] - The company anticipates revenue growth for the full year 2022 to be in the range of 29.5% to 30.5% year-on-year on a constant currency basis [26] - Management noted that the competitive environment for talent remains strong, with a trailing 12-month attrition rate of around 14% [44] Other Important Information - The company has a strong focus on diversity and inclusion, with 40.8% of Thought Workers being women and underrepresented gender minorities [17] - The company is committed to reducing its greenhouse gas emissions and has set ambitious targets for sustainability [23] Q&A Session Summary Question: About gross margin outlook - Management noted that Q1 had a strong gross margin due to rapid ramp-up of engagements and lower-than-expected attrition [30][31] Question: On the Connected acquisition - The Connected acquisition is expected to enhance product development services and has strong synergy with the company's existing US footprint [34] Question: Revenue outlook and seasonality - Management acknowledged that Q2 revenue guidance is impacted by seasonality and COVID-related utilization drops, but overall, the full year outlook remains strong [39][40] Question: Wage inflation and pricing offsets - Management indicated that the company can command premium pricing due to its value proposition, which helps offset wage inflation [41] Question: Attrition by geography - Attrition trends have improved, with a current rate of around 14%, reflecting a competitive talent environment [44] Question: Impact of public company status on pipeline - The company has seen steady growth in its pipeline, with brand recognition benefiting from its public status, although the core strength comes from its technical innovations [51][52]