Thoughtworks Reports Fourth Quarter and Full Year 2022 Financial Results
Thoughtworks Holdings, Inc. (NASDAQ: TWKS) reported Q4 revenues of $310.7 million, an increase of 8.3% year-over-year, with 21.1% growth for full-year revenues totaling $1.3 billion. The company achieved a net income of $16.1 million for Q4 compared to a net loss of $(16.9) million in Q4 2021. Adjusted EBITDA rose to $58.2 million, reflecting an 18.7% margin. For 2023, Thoughtworks anticipates revenues between $303 million and $305 million, indicating a decline of (5.5)% to (5.0)%. Despite challenges, management remains optimistic about revenue contributions from recent acquisitions.
- Fourth quarter revenue growth of 8.3% year-over-year.
- Net income for Q4 2022 increased to $16.1 million from a loss of $(16.9) million in Q4 2021.
- 4Q 2022 Adjusted EBITDA of $58.2 million, an increase of 12.6% from the previous year.
- Full year net loss of $(105.4) million compared to $(0.6) million in 2021.
- Expected Q1 2023 revenue decline of approximately (5.5)% to (5.0)%.
- Bookings decreased by (8.7)% year-over-year for the trailing twelve months.
-
Fourth quarter revenues of
$310.7 million $1.3 billion -
Reported revenue growth of
8.3% for the fourth quarter and21.1% for the full year -
Constant currency growth of
14.7% for the fourth quarter and26.8% for the full year - Provides guidance for the full year and first quarter of 2023
Fourth quarter 2022 summary
-
Revenues of
$310.7 million 8.3% ;14.7% in constant currency1 -
Net income of
$16.1 million $(16.9) million 5.2% compared to net loss margin of (5.9)% for the fourth quarter of 2021 -
Adjusted EBITDA of
$58.2 million $51.7 million 18.7% compared to18.0% for the fourth quarter of 2021 -
Diluted earnings per common share of
$0.05 $(0.06) -
Adjusted Diluted EPS of
$0.10 $0.09 -
Stock-based compensation of
$21.6 million $51.0 million
Full year 2022 summary
-
Revenues of
$1,296.2 million 21.1% ;26.8% in constant currency1 -
Net loss of
$(105.4) million $(0.6) million December 31, 2021 ; net loss margin of (8.1)% compared to (0.1)% for the year endedDecember 31, 2021 -
Adjusted EBITDA of
$256.8 million $223.2 million December 31, 2021 ; Adjusted EBITDA Margin of19.8% compared to20.9% for the year endedDecember 31, 2021 -
Diluted loss per common share of
$(0.34) $(0.24) December 31, 2021 -
Adjusted Diluted EPS of
$0.43 $0.46 December 31, 2021 -
Stock-based compensation of
$249.9 million $46.7 million $128.3 million December 31, 2021
Financial review of fourth quarter 2022 results
Revenues for the fourth quarter were
Gross margin for the fourth quarter was
Adjusted Gross Margin for the fourth quarter was
Selling, general and administrative (“SG&A”) expenses for the fourth quarter were
Adjusted SG&A for the fourth quarter was
Net income and net income margin for the fourth quarter was
Adjusted EBITDA for the fourth quarter was
Diluted earnings per common share for the fourth quarter was
Adjusted Diluted EPS for the fourth quarter of
We saw growth for the quarter across all regions. Revenue growth by customer location was as follows:
-
Geographic revenues increased:
North America 14.7% ;Europe 8.2% ; LATAM4.2% ; and APAC2.1% compared with the fourth quarter of 2021.
We also saw growth across our Automotive, travel and transportation; Energy, public and health services; and Technology and business services industry verticals during the quarter. We experienced a decline in our Retail and consumer; and Financial services and insurance industry verticals. Revenue growth (decline) by industry was as follows:
-
Industry vertical revenues increased: Automotive, travel and transportation
27.4% ; Energy, public and health services13.7% ; and Technology and business services10.1% compared with the fourth quarter of 2021. - Industry vertical revenues decreased: Retail and consumer (4.9)%; and Financial services and insurance (0.1)% compared with the fourth quarter of 2021.
Financial review of full year 2022 results
Revenues for the year ended
Our overall bookings for the trailing twelve months ended
Gross margin for the year ended
Adjusted Gross Margin for the year ended
SG&A expenses for the year ended
Adjusted SG&A for the year ended
Net loss and net loss margin for the year ended
Adjusted EBITDA for the year ended
Diluted loss per common share for the year ended
Adjusted Diluted EPS for the year ended
We saw solid growth for the year ended
-
Geographic revenues increased:
North America 27.1% ;Europe 18.3% ; LATAM18.2% ; and APAC17.1% ; compared with the year endedDecember 31, 2021 .
We also continued to see growth across our industry verticals during the year ended
-
Industry vertical revenues increased: Financial services and insurance
30.1% ; Technology and business services24.7% ; Automotive, travel and transportation21.8% ; Retail and consumer16.5% ; and Energy, public and health services15.0% compared with the year endedDecember 31, 2021 .
We continue to have good liquidity. We had cash and cash equivalents of
Change in accounting principle - Stock-based compensation
In the fourth quarter of 2022, the Company changed its stock-based compensation policy for recognizing expense for graded vesting awards with only service conditions from the accelerated attribution method to the straight-line attribution method. Our financial results included within this press release are presented on a basis consistent with the straight-line method. As such, previously reported financial information has been adjusted to reflect the change in accounting principle. The impacts to our financial statements related to the change in accounting principle are as follows:
Income statement:
-
Three months ended
December 31, 2022 - Net income increased by$2.9 million $0.01 -
Year ended
December 31, 2022 - Net loss decreased by$2.7 million $0.01 -
Three months ended
December 31, 2021 - Net loss decreased by$18.3 million $0.06 -
Year ended
December 31, 2021 - Net loss decreased by$23.0 million $0.09
Balance sheet:
-
December 31, 2022 - Assets - decrease in other non-current assets; Liabilities - increase in deferred tax liabilities; Stockholders’ equity - decrease in additional paid-in capital, increase in accumulated other comprehensive loss, and decrease in retained deficit. Total stockholders’ equity decreased by$6.4 million -
December 31, 2021 - Assets - decrease in other non-current assets; Liabilities - increase in deferred tax liabilities; Stockholders’ equity - decrease in additional paid-in capital, decrease in accumulated other comprehensive loss, and decrease in retained deficit. Total stockholders’ equity decreased by$6.5 million
Cash flows: Changes to our operating cash flows were driven by changes in net (loss) income, stock-based compensation expense, deferred income tax benefit and unrealized foreign currency exchange loss. Total cash flows from operating activities were not impacted by the change.
Financial outlook
First quarter
-
Revenues in the range of
$303 million $305 million 3% to year-over-year revenue growth; -
Adjusted EBITDA Margin in the range of
9.5% to10.5% ; -
Adjusted Diluted EPS in the range of
$0.03 $0.04 -
Stock-based compensation expense of
$19 million
Full year
-
Revenue growth in the range of
0.5% to2.5% ; or0.0% to2.0% in constant currency. Acquisitions, including those completed during 2023, are expected to contribute approximately2% to year-over-year revenue growth; -
Adjusted EBITDA Margin in the range of
18.0% to19.0% ; -
Adjusted Diluted EPS in the range of
$0.38 $0.41 -
Stock-based compensation expense of
$81 million
Conference call information
-###- <TWKS915>
About
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 effects of competition on the future business of
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 non-cash 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 assessable 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
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 related expense on employee equity incentive plan 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 related expense on employee equity incentive plan, 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 related expense on employee equity incentive plan, 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, the change in fair value of contingent consideration, final tax assessment for closed operations and income tax effects of adjustments.
We define Adjusted Diluted EPS as diluted earnings (loss) 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 preferred stock dividends, 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 income (loss) adjusted to exclude income tax expense; interest expense; other expense (income), net, excluding the gain from the sale and settlement of trade receivables; unrealized (gain) loss on foreign currency exchange; stock-based compensation expense; employer payroll related expense 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; IPO-related costs and final tax assessment for closed operations. 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.
|
|||||||||||||||
|
Three months ended
|
|
Year ended |
||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Revenues |
$ |
310,744 |
|
|
$ |
286,800 |
|
|
$ |
1,296,238 |
|
|
$ |
1,069,945 |
|
Operating expenses: |
|
|
|
|
|
|
|
||||||||
Cost of revenues |
|
205,939 |
|
|
|
202,703 |
|
|
|
950,305 |
|
|
|
669,681 |
|
Selling, general and administrative expenses |
|
76,962 |
|
|
|
87,590 |
|
|
|
372,761 |
|
|
|
333,904 |
|
Depreciation and amortization |
|
5,120 |
|
|
|
4,592 |
|
|
|
20,484 |
|
|
|
17,599 |
|
Total operating expenses |
|
288,021 |
|
|
|
294,885 |
|
|
|
1,343,550 |
|
|
|
1,021,184 |
|
Income (loss) from operations |
|
22,723 |
|
|
|
(8,085 |
) |
|
|
(47,312 |
) |
|
|
48,761 |
|
Other (expense) income: |
|
|
|
|
|
|
|
||||||||
Interest expense |
|
(6,959 |
) |
|
|
(5,140 |
) |
|
|
(22,461 |
) |
|
|
(25,456 |
) |
Net realized and unrealized foreign currency gain (loss) |
|
13,498 |
|
|
|
(1,899 |
) |
|
|
(5,405 |
) |
|
|
(5,469 |
) |
Other (expense) income, net |
|
(1,121 |
) |
|
|
(1,977 |
) |
|
|
610 |
|
|
|
(1,671 |
) |
Total other income (expense) |
|
5,418 |
|
|
|
(9,016 |
) |
|
|
(27,256 |
) |
|
|
(32,596 |
) |
Income (loss) before income taxes |
|
28,141 |
|
|
|
(17,101 |
) |
|
|
(74,568 |
) |
|
|
16,165 |
|
Income tax expense |
|
12,033 |
|
|
|
(250 |
) |
|
|
30,825 |
|
|
|
16,740 |
|
Net income (loss) |
$ |
16,108 |
|
|
$ |
(16,851 |
) |
|
$ |
(105,393 |
) |
|
$ |
(575 |
) |
|
|
|
|
|
|
|
|
||||||||
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments |
|
17,082 |
|
|
|
(228 |
) |
|
|
(28,366 |
) |
|
|
(9,270 |
) |
Comprehensive income (loss) |
$ |
33,190 |
|
|
$ |
(17,079 |
) |
|
$ |
(133,759 |
) |
|
$ |
(9,845 |
) |
|
|
|
|
|
|
|
|
||||||||
Net earnings (loss) per common share: |
|
|
|
|
|
|
|
||||||||
Basic earnings (loss) per common share |
$ |
0.05 |
|
|
$ |
(0.06 |
) |
|
$ |
(0.34 |
) |
|
$ |
(0.24 |
) |
Diluted earnings (loss) per common share |
$ |
0.05 |
|
|
$ |
(0.06 |
) |
|
$ |
(0.34 |
) |
|
$ |
(0.24 |
) |
|
|
|
|
|
|
|
|
||||||||
Weighted average shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
315,153,905 |
|
|
|
305,121,815 |
|
|
|
310,911,526 |
|
|
|
254,271,997 |
|
Diluted |
|
329,639,919 |
|
|
|
305,121,815 |
|
|
|
310,911,526 |
|
|
|
254,271,997 |
|
Stock-based compensation expense included in the consolidated statements of (loss) income and comprehensive (loss) income was as follows:
|
Three months ended
|
|
Year ended |
||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||
Cost of revenues |
$ |
15,006 |
|
$ |
35,676 |
|
$ |
176,046 |
|
$ |
60,678 |
Selling, general and administrative expenses |
|
6,601 |
|
|
15,319 |
|
|
73,869 |
|
|
67,624 |
Total stock-based compensation expense |
$ |
21,607 |
|
$ |
50,995 |
|
$ |
249,915 |
|
$ |
128,302 |
|
|||||||
|
|
|
|
||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
194,294 |
|
|
$ |
368,209 |
|
Trade receivables, net of allowance of |
|
201,695 |
|
|
|
145,874 |
|
Unbilled receivables |
|
122,499 |
|
|
|
104,057 |
|
Prepaid expenses |
|
19,353 |
|
|
|
15,994 |
|
Other current assets |
|
18,849 |
|
|
|
44,805 |
|
Total current assets |
|
556,690 |
|
|
|
678,939 |
|
Property and equipment, net |
|
38,798 |
|
|
|
34,500 |
|
Right-of-use assets |
|
43,123 |
|
|
|
— |
|
Intangibles and other assets: |
|
|
|
||||
|
|
405,017 |
|
|
|
346,719 |
|
Trademark |
|
273,000 |
|
|
|
273,000 |
|
Customer relationships, net |
|
124,047 |
|
|
|
125,867 |
|
Other non-current assets |
|
21,175 |
|
|
|
22,838 |
|
Total assets |
$ |
1,461,850 |
|
|
$ |
1,481,863 |
|
Liabilities and stockholders' equity |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable |
$ |
5,248 |
|
|
$ |
4,773 |
|
Long-term debt - current |
|
7,150 |
|
|
|
7,150 |
|
Income taxes payable |
|
22,781 |
|
|
|
15,693 |
|
Accrued compensation |
|
85,477 |
|
|
|
87,059 |
|
Deferred revenue |
|
5,167 |
|
|
|
13,807 |
|
Value-added tax and sales tax payable |
|
7,526 |
|
|
|
7,954 |
|
Accrued expenses |
|
30,227 |
|
|
|
44,094 |
|
Lease liabilities, current |
|
15,994 |
|
|
|
— |
|
Total current liabilities |
|
179,570 |
|
|
|
180,530 |
|
Lease liabilities, non-current |
|
29,885 |
|
|
|
— |
|
Long-term debt, less current portion |
|
391,856 |
|
|
|
497,380 |
|
Deferred tax liabilities |
|
62,555 |
|
|
|
83,191 |
|
Other long-term liabilities |
|
19,762 |
|
|
|
18,805 |
|
Total liabilities |
|
683,628 |
|
|
|
779,906 |
|
Commitments and contingencies |
|
|
|
||||
Stockholders’ equity: |
|
|
|
||||
Convertible preferred stock, |
|
— |
|
|
|
— |
|
Common stock, |
|
366 |
|
|
|
356 |
|
|
|
(624,934 |
) |
|
|
(629,424 |
) |
Additional paid-in capital |
|
1,565,514 |
|
|
|
1,359,149 |
|
Accumulated other comprehensive loss |
|
(39,210 |
) |
|
|
(10,844 |
) |
Retained deficit |
|
(123,514 |
) |
|
|
(17,280 |
) |
Total stockholders' equity |
|
778,222 |
|
|
|
701,957 |
|
Total liabilities and stockholders' equity |
$ |
1,461,850 |
|
|
$ |
1,481,863 |
|
|
|||||||
|
Year ended |
||||||
|
2022 |
|
2021 |
||||
Cash flows from operating activities: |
|
|
|
||||
Net loss |
$ |
(105,393 |
) |
|
$ |
(575 |
) |
Adjustments to reconcile net loss to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization expense |
|
34,446 |
|
|
|
29,528 |
|
Bad debt expense (recovery) |
|
2,002 |
|
|
|
(601 |
) |
Deferred income tax benefit |
|
(19,425 |
) |
|
|
(22,369 |
) |
Stock-based compensation expense |
|
250,505 |
|
|
|
127,713 |
|
Unrealized foreign currency exchange loss |
|
10,106 |
|
|
|
5,028 |
|
Non-cash lease expense on right-of-use assets |
|
18,597 |
|
|
|
— |
|
Other operating activities, net |
|
3,300 |
|
|
|
3,642 |
|
Changes in operating assets and liabilities: |
|
|
|
||||
Trade receivables |
|
(61,877 |
) |
|
|
(32,139 |
) |
Unbilled receivables |
|
(20,711 |
) |
|
|
(16,733 |
) |
Prepaid expenses |
|
(3,567 |
) |
|
|
(6,542 |
) |
Other assets |
|
2,657 |
|
|
|
(31,111 |
) |
Lease liabilities |
|
(16,721 |
) |
|
|
— |
|
Accounts payable |
|
144 |
|
|
|
309 |
|
Accrued expenses and other liabilities |
|
(4,674 |
) |
|
|
62,154 |
|
Net cash provided by operating activities |
|
89,389 |
|
|
|
118,304 |
|
Cash flows from investing activities: |
|
|
|
||||
Purchase of property and equipment |
|
(24,505 |
) |
|
|
(26,068 |
) |
Proceeds from disposal of fixed assets |
|
571 |
|
|
|
518 |
|
Acquisitions, net of cash acquired |
|
(70,011 |
) |
|
|
(44,759 |
) |
Net cash used in investing activities |
|
(93,945 |
) |
|
|
(70,309 |
) |
Cash flows from financing activities: |
|
|
|
||||
Proceeds from initial public offering, net of issuance costs and underwriting discounts |
|
— |
|
|
|
314,716 |
|
Proceeds from issuance of Series A redeemable convertible preferred stock, net of issuance costs |
|
— |
|
|
|
380,994 |
|
Proceeds from issuance of Series B redeemable convertible preferred stock, net of issuance costs |
|
— |
|
|
|
122,228 |
|
Payments of obligations of long-term debt |
|
(107,150 |
) |
|
|
(336,709 |
) |
Payments of debt issuance costs |
|
(3,635 |
) |
|
|
(7,098 |
) |
Proceeds from borrowings on revolving credit facility |
|
— |
|
|
|
— |
|
Payments on revolving credit facility |
|
— |
|
|
|
— |
|
Proceeds from borrowings on long-term debt |
|
— |
|
|
|
401,285 |
|
Proceeds from issuance of common stock on exercise of options, net of employee tax withholding |
|
6,766 |
|
|
|
(851 |
) |
Shares and options purchased under tender offer |
|
— |
|
|
|
(701,960 |
) |
Proceeds from issuance of common stock |
|
— |
|
|
|
1,873 |
|
Dividends paid |
|
— |
|
|
|
(315,003 |
) |
Withholding taxes paid on tender offer |
|
(15,469 |
) |
|
|
— |
|
Withholding taxes paid on dividends previously declared |
|
(10,009 |
) |
|
|
— |
|
Withholding taxes paid related to net share settlement of equity awards |
|
(45,643 |
) |
|
|
— |
|
Other financing activities, net |
|
15 |
|
|
|
(105 |
) |
Net cash used in financing activities |
|
(175,125 |
) |
|
|
(140,630 |
) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
(19,697 |
) |
|
|
(4,622 |
) |
Net decrease in cash, cash equivalents and restricted cash |
|
(199,378 |
) |
|
|
(97,257 |
) |
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 |
$ |
195,564 |
|
|
$ |
394,942 |
|
|
|
|
|
||||
Supplemental disclosure of cash flow information: |
|
|
|
||||
Interest paid |
$ |
20,984 |
|
|
$ |
23,611 |
|
Income taxes paid |
$ |
30,283 |
|
|
$ |
33,344 |
|
|
|
|
|
||||
Supplemental disclosures of non-cash financing activities: |
|
|
|
||||
Withholding taxes payable included within accrued expenses |
$ |
— |
|
|
$ |
25,956 |
|
Withholding taxes payable included within accrued compensation |
$ |
1,020 |
|
|
$ |
— |
|
Option costs receivable included within other current assets |
$ |
257 |
|
|
$ |
— |
|
Conversion of convertible preferred stock to common stock |
$ |
— |
|
|
$ |
826,022 |
|
Net settlement on exercise of shares |
$ |
— |
|
|
$ |
3,611 |
|
|
|
|
|
||||
Reconciliation of cash, cash equivalents and restricted cash: |
|
|
|
||||
Cash and cash equivalents |
$ |
194,294 |
|
|
$ |
368,209 |
|
Restricted cash included in other current assets |
|
— |
|
|
|
25,478 |
|
Restricted cash included in other non-current assets |
|
1,270 |
|
|
|
1,255 |
|
Total cash, cash equivalents and restricted cash |
$ |
195,564 |
|
|
$ |
394,942 |
|
|
|||||||||||||||
|
Three months ended
|
|
Year ended |
||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Net income (loss) allocated to common shareholders |
$ |
16,108 |
|
|
$ |
(16,851 |
) |
|
$ |
(105,393 |
) |
|
$ |
(60,217 |
) |
Preferred stock dividends |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
59,642 |
|
Net income (loss) |
|
16,108 |
|
|
|
(16,851 |
) |
|
|
(105,393 |
) |
|
|
(575 |
) |
Unrealized foreign exchange (gain) loss |
|
(12,136 |
) |
|
|
1,154 |
|
|
|
10,106 |
|
|
|
5,028 |
|
Stock-based compensation |
|
21,607 |
|
|
|
50,995 |
|
|
|
249,915 |
|
|
|
128,302 |
|
Amortization of acquisition-related intangibles |
|
3,400 |
|
|
|
2,995 |
|
|
|
13,144 |
|
|
|
12,046 |
|
Acquisition costs (a) |
|
1,082 |
|
|
|
588 |
|
|
|
4,126 |
|
|
|
8,524 |
|
Certain professional fees (b) |
|
382 |
|
|
|
— |
|
|
|
2,014 |
|
|
|
1,991 |
|
Employer payroll related expense on employee equity incentive plan (c) |
|
(94 |
) |
|
|
1,154 |
|
|
|
6,353 |
|
|
|
1,154 |
|
Final tax assessment for closed operations (d) |
|
— |
|
|
|
— |
|
|
|
258 |
|
|
|
— |
|
Non-recurring tender offer compensation expense (e) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,715 |
|
IPO-related costs (f) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,713 |
|
Change in fair value of contingent consideration (g) |
|
3,454 |
|
|
|
— |
|
|
|
1,027 |
|
|
|
— |
|
Income tax effects of adjustments (h) |
|
(1,650 |
) |
|
|
(11,248 |
) |
|
|
(41,639 |
) |
|
|
(36,498 |
) |
Adjusted Net Income |
$ |
32,153 |
|
|
$ |
28,787 |
|
|
$ |
139,911 |
|
|
$ |
125,400 |
|
|
|
|
|
|
|
|
|
||||||||
GAAP diluted weighted average common shares outstanding |
|
315,153,905 |
|
|
|
305,121,815 |
|
|
|
310,911,526 |
|
|
|
254,271,997 |
|
Employee stock options, RSUs and PSUs |
|
14,486,014 |
|
|
|
24,722,739 |
|
|
|
17,974,425 |
|
|
|
20,253,225 |
|
Adjusted diluted weighted average common shares outstanding |
|
329,639,919 |
|
|
|
329,844,554 |
|
|
|
328,885,951 |
|
|
|
274,525,222 |
|
GAAP diluted earnings (loss) per common share |
$ |
0.05 |
|
|
$ |
(0.06 |
) |
|
$ |
(0.34 |
) |
|
$ |
(0.24 |
) |
Adjusted Diluted EPS |
$ |
0.10 |
|
|
$ |
0.09 |
|
|
$ |
0.43 |
|
|
$ |
0.46 |
|
|
|||||||||||||||
|
Three months ended
|
|
Year ended |
||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Net income (loss) |
$ |
16,108 |
|
|
$ |
(16,851 |
) |
|
$ |
(105,393 |
) |
|
$ |
(575 |
) |
Income tax expense |
|
12,033 |
|
|
|
(250 |
) |
|
|
30,825 |
|
|
|
16,740 |
|
Interest expense |
|
6,959 |
|
|
|
5,140 |
|
|
|
22,461 |
|
|
|
25,456 |
|
Other expense (income), net (i) |
|
3,413 |
|
|
|
1,977 |
|
|
|
1,682 |
|
|
|
1,671 |
|
Unrealized foreign exchange (gain) loss |
|
(12,136 |
) |
|
|
1,154 |
|
|
|
10,106 |
|
|
|
5,028 |
|
Stock-based compensation |
|
21,607 |
|
|
|
50,995 |
|
|
|
249,915 |
|
|
|
128,302 |
|
Depreciation and amortization |
|
8,885 |
|
|
|
7,826 |
|
|
|
34,446 |
|
|
|
29,528 |
|
Acquisition costs (a) |
|
1,082 |
|
|
|
588 |
|
|
|
4,126 |
|
|
|
8,524 |
|
Certain professional fees (b) |
|
382 |
|
|
|
— |
|
|
|
2,014 |
|
|
|
1,991 |
|
Employer payroll related expense on employee equity incentive plan (c) |
|
(94 |
) |
|
|
1,154 |
|
|
|
6,353 |
|
|
|
1,154 |
|
Final tax assessment for closed operations (d) |
|
— |
|
|
|
— |
|
|
|
258 |
|
|
|
— |
|
Non-recurring tender offer compensation expense (e) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,715 |
|
IPO-related costs (g) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
2,713 |
|
Adjusted EBITDA |
$ |
58,239 |
|
|
$ |
51,733 |
|
|
$ |
256,793 |
|
|
$ |
223,247 |
|
Net income (loss) margin |
|
5.2 |
% |
|
|
(5.9 |
)% |
|
|
(8.1 |
)% |
|
|
(0.1 |
)% |
Adjusted EBITDA Margin |
|
18.7 |
% |
|
|
18.0 |
% |
|
|
19.8 |
% |
|
|
20.9 |
% |
|
Three months ended
|
|
Year ended |
||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Gross profit, GAAP |
$ |
104,805 |
|
|
$ |
84,097 |
|
|
$ |
345,933 |
|
|
$ |
400,264 |
|
Stock-based compensation |
|
15,006 |
|
|
|
35,676 |
|
|
|
176,046 |
|
|
|
60,678 |
|
Employer payroll related expense on employee equity incentive plan (c) |
|
(222 |
) |
|
|
98 |
|
|
|
3,930 |
|
|
|
98 |
|
Depreciation expense |
|
3,764 |
|
|
|
3,234 |
|
|
|
13,962 |
|
|
|
11,929 |
|
Adjusted Gross Profit |
$ |
123,353 |
|
|
$ |
123,105 |
|
|
$ |
539,871 |
|
|
$ |
472,969 |
|
Gross margin, GAAP |
|
33.7 |
% |
|
|
29.3 |
% |
|
|
26.7 |
% |
|
|
37.4 |
% |
Adjusted Gross Margin |
|
39.7 |
% |
|
|
42.9 |
% |
|
|
41.6 |
% |
|
|
44.2 |
% |
|
|||||||||||||||
|
Three months ended
|
|
Year ended |
||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
SG&A, GAAP |
$ |
76,962 |
|
|
$ |
87,590 |
|
|
$ |
372,761 |
|
|
$ |
333,904 |
|
Stock-based compensation |
|
(6,601 |
) |
|
|
(15,319 |
) |
|
|
(73,869 |
) |
|
|
(67,624 |
) |
Acquisition costs (a) |
|
(1,082 |
) |
|
|
(588 |
) |
|
|
(4,126 |
) |
|
|
(8,524 |
) |
Certain professional fees (b) |
|
(382 |
) |
|
|
— |
|
|
|
(2,014 |
) |
|
|
(1,991 |
) |
Employer payroll related expense on employee equity incentive plan (c) |
|
(128 |
) |
|
|
(1,056 |
) |
|
|
(2,423 |
) |
|
|
(1,056 |
) |
Non-recurring tender offer compensation expense (e) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,715 |
) |
IPO-related costs (f) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(2,713 |
) |
Adjusted SG&A |
$ |
68,769 |
|
|
$ |
70,627 |
|
|
$ |
290,329 |
|
|
$ |
249,281 |
|
SG&A margin, GAAP |
|
24.8 |
% |
|
|
30.5 |
% |
|
|
28.8 |
% |
|
|
31.2 |
% |
Adjusted SG&A Margin |
|
22.1 |
% |
|
|
24.6 |
% |
|
|
22.4 |
% |
|
|
23.3 |
% |
| (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) | Excludes employer payroll related expense on employee equity incentive plan 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 expenses may vary in any particular period independent of the financial and operating performance of our business. |
|
| (d) |
Adjusts for certain tax related expenses related to final tax assessments from closing operations in |
|
| (e) | Adjusts for the additional compensation expense related to the tender offer completed in the first quarter of 2021. |
|
| (f) | Adjusts for IPO-readiness costs and expenses that do not qualify as equity issuance costs. |
|
| (g) | Adjusts for the non-cash adjustment to the fair value of contingent consideration. |
|
| (h) | Adjusts for the income tax effects of the foregoing adjusted items. |
|
| (i) |
The fourth quarter and full year 2022 excludes a |
|
Three months ended
|
|
Year ended |
|||||||||||||
|
2022 |
|
2021 |
|
2022 |
|
2021 |
||||||||
Net cash provided by operating activities |
$ |
32,131 |
|
|
$ |
22,805 |
|
|
$ |
89,389 |
|
|
$ |
118,304 |
|
Purchase of property and equipment |
|
(4,833 |
) |
|
|
(4,564 |
) |
|
|
(24,505 |
) |
|
|
(26,068 |
) |
Free Cash Flow |
$ |
27,298 |
|
|
$ |
18,241 |
|
|
$ |
64,884 |
|
|
$ |
92,236 |
|
____________________________
1 Revenue Growth Rate at constant currency, Adjusted EBITDA, Adjusted Diluted EPS 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
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FAQ
What were the revenue figures for Thoughtworks (TWKS) in Q4 2022?
What is the financial outlook for Thoughtworks (TWKS) for the first quarter of 2023?
How did Thoughtworks (TWKS) perform in terms of net income in Q4 2022?
What was the adjusted EBITDA margin for Thoughtworks (TWKS) in Q4 2022?
