Thoughtworks (TWKS) Shares Crash as Revenue Drops

Thoughtworks Holding, Inc. has recently released its 10-K report, providing a comprehensive overview of its financial performance and operations. The company, founded in 1993 and headquartered in Chicago, Illinois, offers technology consultancy services across North America, the Asia Pacific, Europe, and Latin America. Its services encompass enterprise modernization, platforms, cloud services, customer experience, product, design, data and artificial intelligence, and digital transformation and operations, catering to various industry verticals.

In the fiscal year ended December 31, 2023, Thoughtworks reported revenues of $1,126,816, reflecting a 13.1% decrease compared to the previous year. The decline in revenue was attributed to a more cautious macroeconomic environment, particularly in the IT services market, along with factors such as incremental project start-ups, shorter contract terms, and client budget caution. Additionally, a larger percentage of work was performed offshore, which has lower bill rates than onshore work. Acquisitions completed in the last twelve months contributed approximately 2% to revenue growth for the year.

The company reported a net loss of $68,661 for the fiscal year 2023, marking a decrease from the net loss of $105,393 in 2022. Adjusted Net Income for 2023 was $37,286, a decrease of 73.4% compared to the previous year. Adjusted EBITDA for 2023 was $111,735, with an adjusted EBITDA margin of 9.9%. The decrease in Adjusted EBITDA compared to 2022 was primarily due to the factors driving a decrease in revenue.

Thoughtworks operates and manages its business as one reportable segment, with the majority of its revenues generated from time-and-materials contracts, which are billed using hourly, daily, or monthly rates. The company also provides fixed-price contracts, and the progress towards satisfaction of the performance obligation is measured using input methods.

The company's financial performance is influenced by various factors, including its client base, revenue growth rate, net dollar retention rate, and global footprint. Thoughtworks remains focused on acquiring new clients and maintaining low client concentration among its largest clients.

As a result of these announcements, the company's shares have moved -30.8% on the market, and are now trading at a price of $3.19. Check out the company's full 10-K submission here.

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