On August 5, 2024, Thoughtworks Holding Inc (TWKS, Financial) released its 8-K filing detailing the financial results for the second quarter of 2024. Thoughtworks Holding Inc is a global technology consultancy that integrates strategy, design, and software engineering to enable enterprises and technology disruptors across the globe to thrive as modern digital businesses. Its global service lines include Enterprise Modernization, Platforms and Cloud; Customer Experience, Product and Design; Data and Artificial Intelligence (AI), and Digital Transformation and Operations. Geographically, it derives a majority of its revenue from North America and also has a presence in APAC, Europe, and LATAM.
Performance and Challenges
Thoughtworks Holding Inc reported revenues of $251.7 million for Q2 2024, a 12.4% year-over-year decline, missing the analyst estimate of $255.76 million. The net loss margin for the quarter widened to 14.5% from 4.3% in the same period last year. The company also reported a diluted loss per share of $(0.11), compared to $(0.04) in Q2 2023, and an adjusted diluted loss per share of $(0.03), down from an adjusted diluted EPS of $0.03 in the previous year.
Financial Achievements and Industry Impact
Despite the challenges, Thoughtworks has made significant strides in its restructuring efforts. The company incurred pre-tax cash charges of approximately $7.2 million during the quarter, including $6.2 million in wage-related costs and $1.0 million in non-wage related costs. Since the inception of the restructuring program in August 2023, Thoughtworks has achieved $108 million of annualized savings. The company aims to capture additional savings of $85 million to $95 million, bringing the total expected savings to $185 million to $210 million by October 31, 2024.
Income Statement Highlights
| Three Months Ended June 30 | 2024 | 2023 | Change | % Change |
|---|---|---|---|---|
| Revenues | $251.7M | $287.2M | $(35.5)M | (12.4)% |
| Gross Profit | $70.2M | $90.9M | $(20.7)M | (22.8)% |
| Net Loss | $(36.5)M | $(12.3)M | $(24.2)M | (196.7)% |
| Adjusted EBITDA | $5.7M | $29.3M | $(23.6)M | (80.5)% |
Balance Sheet and Cash Flow
As of June 30, 2024, Thoughtworks Holding Inc had cash and cash equivalents of $47.7 million and $300.0 million of borrowing capacity under its revolving credit line, which was undrawn. The total debt outstanding was $291.8 million. The company reported a negative cash flow from operations of $(18.2) million for Q2 2024, compared to $(2.8) million in Q2 2023.
Analysis and Outlook
The financial results for Q2 2024 reflect the ongoing challenges Thoughtworks Holding Inc faces in a difficult macroeconomic environment. The significant decline in revenue and increased net loss highlight the impact of reduced client budgets and smaller contract sizes. However, the company's restructuring efforts and cost-saving measures are crucial steps towards improving financial stability and operational efficiency.
For more detailed insights and analysis, visit the full 8-K filing.
Explore the complete 8-K earnings release (here) from Thoughtworks Holding Inc for further details.
