On February 27, 2024, Thoughtworks Holding Inc (TWKS, Financial) released its 8-K filing, detailing the financial results for the fourth quarter and full year of 2023. Thoughtworks, a global technology consultancy known for its comprehensive services in enterprise modernization, customer experience, data and AI, and digital transformation, faced a challenging year marked by macroeconomic pressures and supply constraints.
Financial Performance and Challenges
Thoughtworks reported a decline in both quarterly and annual revenues, with Q4 revenues falling 18.8% to $252.4 million, which was 5% below the company's guidance. The full-year revenue saw a 13.1% decrease to $1,126.8 million. The company attributed the decline primarily to supply constraints in meeting client demand and cautious client behavior in the current economic climate. The net loss margin for Q4 expanded to (8.9)%, a significant drop from the 5.2% net income margin reported in the same quarter of the previous year. Adjusted EBITDA Margin also decreased to 5.5% in Q4 from 18.7% in Q4 2022.
The company's bookings for the trailing twelve months ended December 31, 2023, were $1.2 billion, representing a 14.3% decrease from the previous year. This decline was primarily due to reduced client budgets and a shift to offshore services with lower bill rates.
Restructuring and Cost Savings
Despite the revenue decline, Thoughtworks achieved notable cost savings through its restructuring program, realizing $81 million in annualized cost savings. The restructuring included centralizing operational functions, launching a Digital Engineering Center, instituting a new regional market structure, and implementing leadership changes. The company incurred pre-tax cash charges of approximately $18.9 million related to these restructuring efforts.
Financial Outlook
For the first quarter of 2024, Thoughtworks expects revenues in the range of $241 million to $246 million, reflecting a year-over-year decline of 20% to 21%. The adjusted EBITDA Margin is projected to be between 3.0% and 4.0%, with an adjusted diluted loss per share of $(0.02) to $(0.01). For the full year 2024, the company anticipates revenues between $980 million and $1,010 million, a decline of 10% to 13%, and an adjusted EBITDA Margin of 8.0% to 10.0%.
Conclusion
Thoughtworks' performance in 2023 was significantly impacted by external economic factors and internal supply challenges. However, the company's proactive restructuring efforts and cost-saving measures have positioned it to navigate the ongoing economic uncertainty. Thoughtworks remains focused on driving operational efficiencies and leveraging its strong client base and technological expertise to adapt and thrive in the evolving digital landscape.
For more detailed information on Thoughtworks Holding Inc (TWKS, Financial)'s financial results, please refer to the full 8-K filing.
Investors and stakeholders are encouraged to follow Thoughtworks' press releases, SEC filings, public conference calls, and webcasts to stay informed about the company's strategies and financial performance.
Explore the complete 8-K earnings release (here) from Thoughtworks Holding Inc for further details.
