Thoughtworks(US:TWKS)2021-11-15 19:59Financial Data and Key Metrics Changes - Revenue for Q3 2021 was $285 million, representing a 45% year-over-year increase and a 42% increase on a constant currency basis [6][18] - Adjusted EBITDA margin was 23%, an increase of 110 basis points compared to the same quarter last year [19][24] - Free cash flow for the quarter was $20 million, with a cash balance of $453 million as of September 30, 2021 [26][27] - GAAP diluted loss per share was $0.10, primarily due to non-cash stock compensation charges related to the IPO [25] Business Line Data and Key Metrics Changes - Financial services grew by 61%, with retail and consumer also showing a strong rebound at 61% growth [21] - North America grew at 35%, APAC at 53%, Europe at 49%, and LATAM at 47% [21] - Approximately 90% of revenue came from existing clients, with 29 clients generating over $10 million in trailing 12-month revenues, an increase of 38% from the previous year [22][10] Market Data and Key Metrics Changes - The digital transformation services market is expected to grow from $470 billion in 2020 to around $1 trillion by 2025 [9] - Strong demand for services across all geographies and verticals was noted, with significant growth in financial services and public sector [18][55] Company Strategy and Development Direction - The company aims to deepen relationships with existing clients, establish new client relationships, and develop new technical capabilities [9] - Focus on strategic partnerships and targeted acquisitions to enhance service offerings and market presence [9][44] - Emphasis on maintaining a premium brand and diversified business across industry verticals and geographies [8] Management's Comments on Operating Environment and Future Outlook - Management expects continued strong demand for services and increased IT spending across all verticals and geographies [54] - The company is confident in its ability to hire top talent and maintain a healthy utilization rate despite competitive market conditions [68][69] - Future growth is anticipated to be supported by robust bookings and an increase in average client contract sizes [49] Other Important Information - The company has a strong employer brand, attracting over 192,000 applicants and hiring a record 1,336 new employees in Q3 [29] - The company has been awarded Great Place to Work certification in 11 out of 17 countries, reflecting a strong workplace culture [32] Q&A Session Summary Question: What is the scope and nature of the work coming in this quarter? - Management noted that clients are accelerating their digital transformation plans, leading to increased IT spending across all sectors [54] Question: Can you elaborate on the investments planned for Q4? - Investments will focus on talent development, client portfolio expansion, and partnership programs to support growth [56][58] Question: Can you provide details on the 44 new clients? - New client relationships typically start with one service offering, with expectations to expand into additional services over time [64] Question: How is utilization and attrition trending? - Utilization is within a healthy range, and while attrition is slightly elevated, it is expected to normalize [68] Question: How is demand for onshore services compared to offshore? - There is a stable trend with a slight increase in offshore work due to remote working becoming the norm [74] Question: What are the hiring plans for 2022? - The company plans to continue hiring across all regions, expecting strong growth in 2022 [97] Question: How do you view the balance between organic growth and M&A? - The company plans to use cash flow for M&A, focusing on small tuck-in acquisitions to enhance capabilities [110]