Thoughtworks Reports Strong First Quarter 2022 Financial Results and Raises Full Year 2022 Guidance

  • Revenues of $320.9 million
  • Reported revenue growth of 35.0% in the first quarter
  • Provides updated guidance for the second quarter and full year 2022

CHICAGO--()--Thoughtworks Holding, Inc. (NASDAQ: TWKS) ("Thoughtworks" or the "Company"), a leading global technology consultancy, today reported results for the first quarter of 2022 and provided an updated financial outlook for the full year and second quarter of 2022.

Guo Xiao, Thoughtworks' Chief Executive Officer, said, "We are proud of our outstanding performance in the first quarter. Our revenue growth was 35.0%, 38.2% in constant currency, compared to the first quarter of 2021, as clients continue to trust Thoughtworks to deliver on their digital transformation ambitions. Our results reflect the extraordinary impact of Thoughtworkers across five continents. Thoughtworks’ business is highly diversified and we continue to see robust demand for our services. Our premium position, our advocacy for social change and cultivating culture attracts and retains outstanding talent and we are well placed to capitalize on this market opportunity."

First quarter 2022 highlights

  • Revenues of $320.9 million, an increase of 35.0% year-over-year and 38.2% on a constant currency basis1
  • Net loss of $(59.9) million, a decrease of 422.3% compared to the first quarter of 2021; net loss margin of (18.7)% compared to net income margin of 7.8% in the first quarter of 2021
  • Adjusted EBITDA of $72.9 million, an increase of 35.4% compared to the first quarter of 2021; Adjusted EBITDA Margin of 22.7%, consistent with 22.7% in the first quarter of 2021
  • Diluted loss per common share of $(0.20) compared to diluted earnings per common share of $0.06 for the first quarter 2021
  • Adjusted Diluted Earnings per Share ("Adjusted Diluted EPS") of $0.13 compared to $0.14 for the first quarter of 2021
  • Stock-based compensation for the first quarter was $120.7 million, which includes $47.7 million related to the approval of China SAFE during the quarter2, compared to $1.9 million for the first quarter of 2021

_____________________________
1
Revenue Growth Rate at constant currency, Adjusted EBITDA, and certain other measures in this release, are non-GAAP financial measures. See “Non-GAAP financial measures” for how we define these measures and the financial tables that accompany this release for reconciliation of these measures to the closest comparable GAAP measures.
2 During the first quarter, the Company recorded stock-based compensation expense for equity awards that were previously awarded to participants but were contingent upon the successful and active registration with the State Administration of Foreign Exchange of the People's Republic of China (“China SAFE”), which occurred on February 25, 2022.

Financial review of first quarter 2022 results

Revenues for the first quarter were $320.9 million, an increase of 35.0% year-over-year and 38.2% on a constant currency basis. Revenues were $15.9 million above the high point of our guidance range of $305.0 million, with sequential quarter on quarter growth of 11.9%.

Gross margin for the first quarter was 17.9%, a decrease of 25.4% from 43.3% in the first quarter of 2021, primarily impacted by $83.5 million of stock-based compensation2 recorded in cost of revenues.

Adjusted Gross Margin was 45.6%, compared to 44.7% in the first quarter of 2021.

Selling, general and administrative (“SG&A”) expenses for the first quarter were $111.7 million, 34.8% of revenues, compared to $66.5 million, or 28.0% of revenues, for the first quarter of 2021, primarily impacted by $37.2 million of stock-based compensation2.

Adjusted SG&A for the first quarter was $72.4 million, or 22.6% of revenues, compared to $53.6 million, or 22.6% of revenues, for the first quarter of 2021.

Net loss and net loss margin for the first quarter was $(59.9) million and (18.7)%, respectively, compared to net income and net income margin of $18.6 million and 7.8%, respectively, for the first quarter of 2021, impacted primarily by $120.7 million of stock-based compensation expense2.

Adjusted EBITDA for the first quarter was $72.9 million, an increase of 35.4% compared to the first quarter of 2021. Adjusted EBITDA Margin was 22.7%, consistent with the first quarter of 2021.

Diluted loss per common share for the first quarter was $(0.20), compared to diluted earnings per common share of $0.06 in the first quarter of 2021.

Adjusted Diluted EPS of $0.13 compared to $0.14 for the first quarter 2021, after adjusting for $120.7 million of stock-based compensation2, $3.0 million of intangibles amortization, $3.6 million of employer payroll tax on employee equity incentive plans, $0.8 million of non-recurring professional fees, $5.8 million of unrealized foreign exchange gains and $18.4 million in income tax effects for the aforementioned adjustments.

We saw strong growth for the quarter across all regions. Revenue growth by customer location for the first quarter was as follows:

  • Geographic revenues increased: APAC 40.8%; North America 35.8%; Europe 29.3%; and LATAM 24.2% compared with the first quarter of 2021.

We also continued to see strong growth across our industry verticals during the quarter. Revenue growth by industry for the first quarter was as follows:

  • Industry vertical revenues increased: Financial services and insurance 70.7%; Retail and consumer 51.8%; Technology and business services 28.9%; Energy, public and health services 21.1%; and Automotive, travel and transportation 16.0% compared with the first quarter of 2021.

We continue to have strong liquidity. We had cash and cash equivalents of $339.6 million as of March 31, 2022, along with $165.0 million of borrowing capacity under our revolving credit line. Our total debt outstanding, before deferred financing fees, was $507.9 million at March 31, 2022. Cash flow used in operations was $(6.1) million in the first quarter of 2022, compared to cash flow provided by operations of $29.8 million in the first quarter of 2021. Free Cash Flow in the first quarter of 2022 was $(11.2) million, compared to $24.2 million in the first quarter of 2021.

Financial outlook

Thoughtworks provides the following updated outlook for the second quarter and full year 2022:

Second quarter

Thoughtworks expects the following for the second quarter:

  • Revenues in the range of $328 million to $329 million, reflecting year-over-year growth at the midpoint of 26.2%, or 29.5% on a constant currency basis, which includes approximately 2% related to acquisitions;
  • Adjusted EBITDA Margin in the range of 17.0% to 17.5%; and
  • Adjusted Diluted EPS in the range of $0.11 to $0.12 for the quarter, assuming a weighted average of 333 million diluted outstanding shares for the quarter.

Full year

Thoughtworks expects the following for the full year:

  • Revenue growth in the range of 29.5% to 30.5% year-over-year on a constant currency basis. Revenue growth on a reported basis in the range of 27.5% to 28.5% which includes a negative foreign currency translation impact of approximately 2.0% and approximately 2% related to acquisitions;
  • Adjusted EBITDA Margin in the range of 19.0% to 20.0%; and
  • Adjusted Diluted EPS in the range of $0.51 to $0.53 for the year, assuming a weighted average of 332 million diluted outstanding shares for the year.

Conference call information

Thoughtworks will host a conference call and webcast call at 8:00 a.m. Eastern Time on Monday, May 9, 2022, to discuss our financial results. The conference call can be accessed through the following numbers: USA / Canada toll-free: +1 (844) 834-1436, International dial-in number: +1 (929) 517-0930, Conference ID: 9394875. To access the webcast and the accompanying slide presentation, which has additional information regarding Thoughtworks' operating results, you can visit our investor relations website at https://investors.thoughtworks.com. A telephone replay will be available from 11:00 a.m. ET on Monday, May 9, 2022 and for seven days following that, on +1 (855) 859-2056 and on +1 (404) 537-3406. A replay of the webcast will also be made available on our investor relations website at https://investors.thoughtworks.com. Information on Thoughtworks' website is not part of this press release.

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About Thoughtworks

Thoughtworks is a global technology consultancy that integrates strategy, design and engineering to drive digital innovation. We are 11,000+ Thoughtworkers strong across 49 offices in 17 countries. Over the last 25+ years, we've delivered extraordinary impact together with our clients by helping them solve complex business problems with technology as the differentiator.

Thoughtworks uses and intends to continue to use our investor relations website at https://investors.thoughtworks.com and social media, @thoughtworks on Twitter and LinkedIn, as a means of publicly disclosing material information and for complying with our disclosure obligations under Regulation Fair Disclosure. Investors should monitor these channels in addition to following the company’s press releases, SEC filings, public conference calls and webcasts.

Forward-looking statements

This press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify these forward-looking statements by the use of terms such as "expect," "will," "continue," or similar expressions, and variations or negatives of these words, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements represent our management's beliefs and assumptions only as of the date of this press release. You should read this press release with the understanding that our actual future results may be materially different from what we expect. All statements other than statements of historical fact are statements that could be deemed forward-looking statements, which include but are not limited to: the statements under "Financial outlook," including expectations relating to revenues and other financial or business metrics; statements regarding relationships with clients and business momentum; and any other statements of expectation or belief. These statements are subject to known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from results expressed or implied in this press release. Such risk factors include, but are not limited to, those related to: the current and future impact of the COVID-19 pandemic on Thoughtworks' business and industry; the effects of competition on the future business of Thoughtworks; uncertainty regarding the demand for and market utilization of our services; the ability to maintain or acquire new client relationships; general business and economic conditions; and our ability to successfully execute our growth strategy and strategic plans. For additional information concerning these and other risks and uncertainties, please see Thoughtworks' latest Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings and reports that Thoughtworks may file from time to time with the SEC. Except as required by law, Thoughtworks assumes no obligation, and does not intend, to update these forward-looking statements, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Non-GAAP financial measures

Certain financial metrics contained in this press release are considered non-GAAP financial measures. Definitions of and the related reconciliations for these non-GAAP financial measures can be found below. We use these non-GAAP measures in conjunction with traditional GAAP measures to evaluate our financial performance. We believe that these non-GAAP measures provide our management and investors consistency and comparability with our past financial performance and facilitate period-to-period comparisons of operations. However, non-GAAP measures have limitations as analytical tools, and you should not consider these measures in isolation or as substitutes for analysis of our financial results as reported under GAAP. For example, many of the non-GAAP financial measures used herein exclude stock-based compensation expense, which has recently been, and will continue to be for the foreseeable future, a significant recurring expense for our business and an important part of our compensation strategy.

Certain non-GAAP measures related to our financial outlook included in this press release and the associated webcast were not reconciled to the comparable GAAP financial measures because the GAAP measures are not accessible on a forward-looking basis. The Company is unable to reconcile these forward-looking non-GAAP financial measures to the most directly comparable GAAP measures without unreasonable efforts because the Company is currently unable to predict with a reasonable degree of certainty the type and extent of certain items that would be expected to impact GAAP measures for these periods but would not impact the non-GAAP measures. Such items may include stock-based compensation, acquisitions, income tax effects of adjustments and other items. The unavailable information could have a significant impact on the Company's GAAP financial results. Based on the foregoing, the Company believes that providing estimates of the amounts that would be required to reconcile the range of the non-GAAP measures to forecasted GAAP measures would imply a degree of precision that would be confusing or misleading to investors for the reasons identified above.

Revenue Growth Rate and Revenue Growth Rate at constant currency

Certain of our subsidiaries use functional currencies other than the U.S. dollar and the translation of these foreign currency amounts into U.S. dollars can impact the comparability of our revenues between periods. Accordingly, we use Revenue Growth Rate at constant currency as an important indicator of our underlying performance. Revenue Growth Rate at constant currency is calculated by applying the average exchange rates in effect during the earlier comparative fiscal period to the later fiscal period.

Adjusted Gross Profit and Adjusted Gross Margin

We define gross profit as total revenues less cost of revenues. We define Adjusted Gross Profit as gross profit excluding stock-based compensation expense, employer payroll tax on employee equity incentive plans and depreciation expense. We calculate Adjusted Gross Margin by dividing Adjusted Gross Profit by total revenues. Our management uses Adjusted Gross Profit to assess overall performance and profitability, without regard to the aforementioned adjustments, which are unrelated to our ongoing revenue-generating operations. We also believe this information will be useful for investors to facilitate comparisons of our operating performance and better identify trends in our business.

Adjusted SG&A and Adjusted SG&A Margin

We define Adjusted SG&A as selling, general and administrative expense excluding stock-based compensation expense, employer payroll tax on employee equity incentive plans, acquisition costs, certain professional fees that are considered unrelated to our ongoing revenue-generating operations, tender offer compensation expense that is considered one-time in nature and IPO-related costs. We calculate Adjusted SG&A Margin by dividing Adjusted SG&A by total revenues.

Our management uses Adjusted SG&A and Adjusted SG&A Margin to assess our overall performance, without regard to items such as stock-based compensation expense and other items that are considered to be unique or non-recurring in nature or otherwise unrelated to our ongoing revenue-generating operations. We also believe this information will be useful for investors to facilitate comparisons of our operating performance and better identify trends in our business.

Adjusted Net Income and Adjusted Diluted EPS

We define Adjusted Net Income as net (loss) income adjusted for unrealized (gain) loss on foreign currency exchange, stock-based compensation expense, employer payroll tax on employee equity incentive plans, amortization of acquisition-related intangibles, acquisition costs, certain professional fees that are considered unrelated to our ongoing revenue-generating operations, tender offer compensation expense that is considered one-time in nature, IPO-related costs and income tax effects of adjustments.

We define Adjusted Diluted EPS as diluted (loss) earnings per common share, with the numerator adjusted for the aforementioned adjustments to Adjusted Net Income. In other words, the numerator for Adjusted Diluted EPS utilizes Adjusted Net Income. We calculate Adjusted Diluted EPS by dividing Adjusted Net Income, after adjusting for earnings allocated to preferred stock, resulting in Adjusted Net Income attributable to common shareholders, by diluted weighted average shares outstanding.

Our management uses Adjusted Net Income and Adjusted Diluted EPS to assess our overall performance, without regard to items that are considered to be unique or non-recurring in nature or otherwise unrelated to our ongoing revenue-generating operations, net of the income tax effects of adjustments.

Our management uses Adjusted Net Income for planning purposes, including the preparation of our annual operating budget, as a measure of our core operating results and the effectiveness of our business strategy, and in evaluating our financial performance. We also believe this information will be useful for investors to facilitate comparisons of our operating performance and better identify trends in our business.

Adjusted EBITDA and Adjusted EBITDA Margin

We define Adjusted EBITDA as net (loss) income excluding income tax expense, interest expense, other expense (income), net, unrealized (gain) loss on foreign currency exchange, stock-based compensation expense, employer payroll tax on employee equity incentive plan, depreciation and amortization expense, acquisition costs, certain professional fees that are considered unrelated to our ongoing revenue generating operations, tender offer compensation expense that is considered one-time in nature and IPO-related costs. We calculate Adjusted EBITDA Margin by dividing Adjusted EBITDA by total revenues.

Adjusted EBITDA and Adjusted EBITDA Margin are widely used by investors and securities analysts to measure a company's operating performance without regard to the aforementioned adjustments that can vary substantially from company to company depending upon their financing, capital structures, and the method by which assets were acquired or costs that are unique or non-recurring in nature or otherwise unrelated to our ongoing revenue-generating operations.

Our management uses Adjusted EBITDA and Adjusted EBITDA Margin for planning purposes, including the preparation of our annual operating budget, as a measure of our core operating results and the effectiveness of our business strategy, and in evaluating our financial performance. We also believe this information will be useful for investors to facilitate comparisons of our operating performance and better identify trends in our business.

Free Cash Flow

We define Free Cash Flow as net cash provided by operating activities less cash used for purchases of property and equipment. We believe that Free Cash Flow is a useful indicator of liquidity for investors and is used by our management as it measures our ability to generate cash, or our need to access additional sources of cash, to fund operations and investments. There are a number of limitations related to the use of free cash flow as compared to net cash from operating activities, including that Free Cash Flow includes capital expenditures, the benefits of which are realized in periods subsequent to those when expenditures are made.

THOUGHTWORKS HOLDING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME AND COMPREHENSIVE (LOSS) INCOME

(In thousands, except share and per share data)

(Unaudited)

 

 

Three months ended March 31,

 

 

2022

 

 

 

2021

 

Revenues

$

320,940

 

 

$

237,662

 

Operating expenses:

 

 

 

Cost of revenues

 

263,349

 

 

 

134,791

 

Selling, general and administrative expenses

 

111,734

 

 

 

66,516

 

Depreciation and amortization

 

5,846

 

 

 

4,346

 

Total operating expenses

 

380,929

 

 

 

205,653

 

(Loss) income from operations

 

(59,989

)

 

 

32,009

 

Other income (expense):

 

 

 

Interest expense

 

(4,647

)

 

 

(6,194

)

Net realized and unrealized foreign currency gain (loss)

 

4,945

 

 

 

(2,668

)

Other income, net

 

88

 

 

 

61

 

Total other income (expense)

 

386

 

 

 

(8,801

)

(Loss) income before income taxes

 

(59,603

)

 

 

23,208

 

Income tax expense

 

301

 

 

 

4,623

 

Net (loss) income

$

(59,904

)

 

$

18,585

 

 

 

 

 

Other comprehensive (loss) income, net of tax:

 

 

 

Foreign currency translation adjustments

 

(5,679

)

 

 

(3,968

)

Comprehensive (loss) income

$

(65,583

)

 

$

14,617

 

 

 

 

 

Net (loss) earnings per common share:

 

 

 

Basic (loss) earnings per common share

$

(0.20

)

 

$

0.06

 

Diluted (loss) earnings per common share

$

(0.20

)

 

$

0.06

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

Basic

 

306,189,816

 

 

 

242,471,720

 

Diluted

 

306,189,816

 

 

 

249,125,028

 

Stock-based compensation expense included in the condensed consolidated statements of (loss) income and comprehensive (loss) income was as follows:

 

Three months ended March 31,

 

2022

 

2021

Cost of revenues

$

83,493

 

$

782

Selling, general and administrative expenses

 

37,243

 

 

1,092

Total stock-based compensation expense

$

120,736

 

$

1,874

THOUGHTWORKS HOLDING, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

 

 

March 31, 2022

 

December 31, 2021

 

(unaudited)

 

 

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

339,638

 

 

$

368,209

 

Trade receivables, net of allowance of $10,431 and $8,916, respectively

 

146,835

 

 

 

145,874

 

Unbilled receivables

 

139,917

 

 

 

104,057

 

Prepaid expenses and other current assets

 

74,067

 

 

 

60,799

 

Total current assets

 

700,457

 

 

 

678,939

 

Property and equipment, net

 

34,526

 

 

 

34,500

 

Right-of-use assets

 

39,377

 

 

 

 

Intangibles and other assets:

 

 

 

Goodwill

 

345,595

 

 

 

346,719

 

Trademark

 

273,000

 

 

 

273,000

 

Customer relationships, net

 

123,315

 

 

 

125,867

 

Other non-current assets

 

29,610

 

 

 

25,125

 

Total assets

$

1,545,880

 

 

$

1,484,150

 

Liabilities and stockholders' equity

 

 

 

Current liabilities:

 

 

 

Accounts payable

$

6,379

 

 

$

4,773

 

Long-term debt - current

 

7,150

 

 

 

7,150

 

Income taxes payable

 

20,029

 

 

 

15,693

 

Accrued compensation

 

107,598

 

 

 

79,460

 

Deferred revenue

 

5,230

 

 

 

13,807

 

Value-added tax and sales tax payable

 

5,096

 

 

 

7,954

 

Accrued expenses

 

29,845

 

 

 

51,693

 

Lease liabilities, current

 

14,426

 

 

 

 

Total current liabilities

 

195,753

 

 

 

180,530

 

Lease liabilities, non-current

 

27,695

 

 

 

 

Long-term debt, less current portion

 

495,785

 

 

 

497,380

 

Deferred tax liabilities

 

74,160

 

 

 

78,944

 

Other long-term liabilities

 

17,581

 

 

 

18,805

 

Total liabilities

 

810,974

 

 

 

775,659

 

Commitments and contingencies

 

 

 

Stockholders’ equity:

 

 

 

Convertible preferred stock, $0.001 par value; 100,000,000 shares authorized, zero issued and outstanding at March 31, 2022 and December 31, 2021, respectively

 

 

 

 

 

Common stock, $0.001 par value; 1,000,000,000 shares authorized, 360,854,572 and 356,117,752 issued, 310,024,807 and 305,132,181 outstanding at March 31, 2022 and December 31, 2021, respectively

 

361

 

 

 

356

 

Treasury stock, 50,829,765 and 50,985,571 shares at March 31, 2022 and December 31, 2021, respectively

 

(627,484

)

 

 

(629,424

)

Additional paid-in capital

 

1,481,524

 

 

 

1,390,630

 

Accumulated other comprehensive loss

 

(16,542

)

 

 

(10,863

)

Retained deficit

 

(102,953

)

 

 

(42,208

)

Total stockholders' equity

 

734,906

 

 

 

708,491

 

Total liabilities and stockholders' equity

$

1,545,880

 

 

$

1,484,150

 

THOUGHTWORKS HOLDING, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)

(In thousands)

 

 

Three months ended March 31,

 

2022

 

2021

Cash flows from operating activities:

 

 

 

Net (loss) income

$

(59,904

)

 

$

18,585

 

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

 

 

 

Depreciation and amortization expense

 

8,582

 

 

 

6,884

 

Bad debt recovery

 

(100

)

 

 

(168

)

Deferred income tax benefit

 

(6,461

)

 

 

(1,252

)

Stock-based compensation expense

 

120,737

 

 

 

1,874

 

Unrealized foreign currency exchange (gains) losses

 

(5,847

)

 

 

3,929

 

Non-cash lease expense on right-of-use assets

 

4,153

 

 

 

 

Other operating activities, net

 

314

 

 

 

707

 

Changes in operating assets and liabilities:

 

 

 

Trade receivables

 

(1,130

)

 

 

27,579

 

Unbilled receivables

 

(35,314

)

 

 

(20,422

)

Prepaid expenses and other assets

 

(4,963

)

 

 

(20,045

)

Lease liabilities

 

(2,358

)

 

 

 

Accounts payable

 

1,613

 

 

 

1,036

 

Accrued expenses and other liabilities

 

(25,417

)

 

 

11,054

 

Net cash (used in) provided by operating activities

 

(6,095

)

 

 

29,761

 

Cash flows from investing activities:

 

 

 

Purchase of property and equipment

 

(5,134

)

 

 

(5,584

)

Proceeds from disposal of fixed assets

 

136

 

 

 

77

 

Acquisition of businesses, net of cash acquired

 

 

 

 

(44,759

)

Net cash used in investing activities

 

(4,998

)

 

 

(50,266

)

Cash flows from financing activities:

 

 

 

Proceeds from issuance of Series A redeemable convertible preferred stock, net of issuance costs

 

 

 

 

380,994

 

Proceeds from issuance of common stock

 

 

 

 

1,873

 

Payments of obligations of long-term debt

 

(1,788

)

 

 

(131,346

)

Payments of debt issuance costs

 

 

 

 

(7,176

)

Proceeds from borrowings on long-term debt

 

 

 

 

401,285

 

Proceeds from issuance of common stock on exercise of options, net of employee tax withholding

 

704

 

 

 

62

 

Shares and options purchased under tender offer

 

 

 

 

(702,173

)

Withholding taxes paid on tender offer

 

(15,469

)

 

 

 

Withholding taxes paid on dividends previously declared

 

(5,903

)

 

 

 

Withholding taxes paid related to net share settlement of equity awards

 

(7,307

)

 

 

 

Other financing activities, net

 

(29

)

 

 

(139

)

Net cash used in financing activities

 

(29,792

)

 

 

(56,620

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

 

182

 

 

 

(1,204

)

Net decrease in cash, cash equivalents and restricted cash

 

(40,703

)

 

 

(78,329

)

Cash, cash equivalents and restricted cash at beginning of the period

 

394,942

 

 

 

492,199

 

Cash, cash equivalents and restricted cash at end of the period

$

354,239

 

 

$

413,870

 

 

 

 

 

Supplemental disclosure of cash flow information:

 

 

 

Interest paid

$

4,355

 

 

$

5,067

 

Income taxes paid

$

2,383

 

 

$

3,394

 

 

 

 

 

Supplemental disclosures of non-cash financing activities:

 

 

 

Withholding taxes payable included within accrued expenses

$

4,575

 

 

$

15,469

 

Withholding taxes payable included within accrued compensation

$

21,930

 

 

$

 

Option costs receivable included within prepaid expenses and other current assets

$

635

 

 

$

 

 

 

 

 

Reconciliation of cash, cash equivalents and restricted cash:

 

 

 

Cash and cash equivalents

$

339,638

 

 

$

397,291

 

Restricted cash included in other current assets

 

13,376

 

 

 

15,256

 

Restricted cash included in other non-current assets

 

1,225

 

 

 

1,323

 

Total cash, cash equivalents and restricted cash

$

354,239

 

 

$

413,870

 

THOUGHTWORKS HOLDING, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands, except percentages, share and per share data)

(Unaudited)

 

 

Three months ended March 31,

 

2022

 

2021

Net (loss) income

$

(59,904

)

 

$

18,585

 

Income tax expense

 

301

 

 

 

4,623

 

Interest expense

 

4,647

 

 

 

6,194

 

Other income, net

 

(88

)

 

 

(61

)

Unrealized foreign exchange (gains) losses

 

(5,847

)

 

 

3,929

 

Stock-based compensation

 

120,736

 

 

 

1,874

 

Depreciation and amortization

 

8,582

 

 

 

6,884

 

Acquisition costs (a)

 

20

 

 

 

6,403

 

Certain professional fees (b)

 

803

 

 

 

1,648

 

Non-recurring tender offer compensation expense (c)

 

 

 

 

2,714

 

IPO-related costs (d)

 

 

 

 

1,043

 

Employer payroll tax on employee equity incentive plans (e)

 

3,622

 

 

 

 

Adjusted EBITDA

$

72,872

 

 

$

53,836

 

Net (loss) income margin

 

(18.7

)%

 

 

7.8

%

Adjusted EBITDA Margin

 

22.7

%

 

 

22.7

%

 

Three months ended March 31,

 

 

2022

 

 

 

2021

 

Net (loss) income allocated to common shareholders

$

(59,904

)

 

$

15,174

 

Earnings allocated to Preferred Stock

 

 

 

 

3,411

 

Net (loss) income

 

(59,904

)

 

 

18,585

 

Unrealized foreign exchange (gains) losses

 

(5,847

)

 

 

3,929

 

Stock-based compensation

 

120,736

 

 

 

1,874

 

Amortization of acquisition-related intangibles

 

2,992

 

 

 

2,981

 

Acquisition costs (a)

 

20

 

 

 

6,403

 

Certain professional fees (b)

 

803

 

 

 

1,648

 

Non-recurring tender offer compensation expense (c)

 

 

 

 

2,714

 

IPO-related costs (d)

 

 

 

 

1,043

 

Employer payroll tax on employee equity incentive plans (e)

 

3,622

 

 

 

 

Income tax effects of adjustments (f)

 

(18,430

)

 

 

(4,098

)

Adjusted Net Income

$

43,992

 

 

$

35,079

 

 

 

 

 

GAAP diluted weighted average common shares outstanding

 

306,189,816

 

 

 

249,125,028

 

Employee stock options and RSUs

 

24,555,214

 

 

 

 

Adjusted diluted weighted average common shares outstanding

 

330,745,030

 

 

 

249,125,028

 

GAAP diluted (loss) earnings per common share

$

(0.20

)

 

$

0.06

 

Adjusted Diluted EPS

$

0.13

 

 

$

0.14

 

THOUGHTWORKS HOLDING, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands, except percentages, share and per share data)

(Unaudited)

 

 

Three months ended March 31,

Adjusted Gross Profit reconciliation:

2022

 

2021

Gross profit, GAAP

$

57,591

 

 

$

102,871

 

Stock-based compensation

 

83,493

 

 

 

782

 

Employer payroll tax on employee equity incentive plans (e)

 

2,376

 

 

 

 

Depreciation expense

 

2,736

 

 

 

2,538

 

Adjusted Gross Profit

$

146,196

 

 

$

106,191

 

Gross margin, GAAP

 

17.9

%

 

 

43.3

%

Adjusted Gross Margin

 

45.6

%

 

 

44.7

%

 

Three months ended March 31,

Adjusted SG&A reconciliation:

2022

 

2021

SG&A, GAAP

$

111,734

 

 

$

66,516

 

Stock-based compensation

 

(37,243

)

 

 

(1,092

)

Acquisition costs (a)

 

(20

)

 

 

(6,403

)

Certain professional fees (b)

 

(803

)

 

 

(1,648

)

Non-recurring tender offer compensation expense (c)

 

 

 

 

(2,714

)

IPO-related costs (d)

 

 

 

 

(1,043

)

Employer payroll tax on employee equity incentive plans (e)

 

(1,246

)

 

 

 

Adjusted SG&A

$

72,422

 

 

$

53,616

 

SG&A margin, GAAP

 

34.8

%

 

 

28.0

%

Adjusted SG&A Margin

 

22.6

%

 

 

22.6

%

(a)

Reflects costs for certain professional fees and retention wage expenses related to certain acquisitions.

(b)

Adjusts for certain transaction expenses, non-recurring legal expenses, and one-time professional fees.

(c)

Adjusts for the additional compensation expense related to the tender offer completed in the first quarter of 2021.

(d)

Adjusts for IPO-readiness costs and expenses that do not qualify as equity issuance costs.

(e)

We exclude employer payroll tax expense on equity incentive plans as these expenses are tied to the exercise or vesting of underlying equity awards and the price of our common stock at the time of vesting or exercise. As a result, these taxes may vary in any particular period independent of the financial and operating performance of our business.

(f)

Adjusts for the income tax effects of the foregoing adjusted items.

 

Three months ended March 31,

Free Cash Flow reconciliation:

2022

 

2021

Net cash provided by operating activities

$

(6,095

)

 

$

29,761

 

Purchase of property and equipment

 

(5,134

)

 

 

(5,584

)

Free Cash Flow

$

(11,229

)

 

$

24,177

 

 

Contacts

Investor contact:

Thoughtworks Holding, Inc.
Investor Relations: investor-relations@thoughtworks.com

Press contact:

Thoughtworks Holding, Inc.
Linda Horiuchi: linda.horiuchi@thoughtworks.com

Release Summary

Thoughtworks (Nasdaq: TWKS) reports financial results for the first quarter of 2022.

Contacts

Investor contact:

Thoughtworks Holding, Inc.
Investor Relations: investor-relations@thoughtworks.com

Press contact:

Thoughtworks Holding, Inc.
Linda Horiuchi: linda.horiuchi@thoughtworks.com