twks-20240331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from ______ to _____

Commission File Number 001-40812

THOUGHTWORKS HOLDING, INC.

(Exact name of registrant as specified in its charter)


Delaware						82-2668392
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification Number)

200 East Randolph Street, 25th Floor

Chicago, Illinois 60601

(312) 373-1000

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.001 par value

TWKS

Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of May 2, 2024, there were 322,913,818 shares of the registrant's common stock outstanding.


THOUGHTWORKS HOLDING, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS

		Page
Forward-Looking Statements		3

Part I. Financial Information
Item 1	Condensed Consolidated Financial Statements (Unaudited)	6
	Condensed Consolidated Balance Sheets as of March 31, 2024 (Unaudited) and December 31, 2023	6
	Condensed Consolidated Statements of Loss and Comprehensive Loss for the three months ended March 31, 2024 and 2023 (Unaudited)	7
	Condensed Consolidated Statements of Changes in Stockholders' Equity for the three months ended March 31, 2024 and 2023 (Unaudited)	8
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (Unaudited)	9
	Notes to the Condensed Consolidated Financial Statements (Unaudited)	10
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3	Quantitative and Qualitative Disclosure About Market Risk	32
Item 4	Controls and Procedures	32

Part II. Other Information
Item 1	Legal Proceedings	34
Item 1A	Risk Factors	34
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3	Defaults Upon Senior Securities	34
Item 4	Mine Safety Disclosures	34
Item 5	Other Information	34
Item 6	Exhibits	35
Signatures		36


THOUGHTWORKS HOLDING, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share data and per share data)
	March 31, 2024		December 31, 2023
	(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	72,554	$	100,305
Trade receivables, net of allowance of $9,991 and $9,550, respectively	130,560		167,942
Unbilled receivables	133,980		115,150
Prepaid expenses	18,230		19,692
Other current assets	25,816		25,269
Total current assets	381,140		428,358
Property and equipment, net	27,246		26,046
Right-of-use assets	39,198		41,771
Intangibles and other assets:
Goodwill	419,875		424,565
Trademark	273,000		273,000
Customer relationships, net	108,933		114,186
Other non-current assets	19,128		19,310
Total assets	$	1,268,520	$	1,327,236
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	4,266	$	2,767
Long-term debt, current	7,150		7,150

Accrued compensation	72,721		88,712
Deferred revenue	12,138		18,090

Accrued expenses and other current liabilities	22,223		27,260
Lease liabilities, current	14,092		15,301
Total current liabilities	132,590		159,280
Lease liabilities, non-current	28,032		29,791
Long-term debt, less current portion	284,364		286,035
Deferred tax liabilities	47,708		54,907
Other long-term liabilities	22,470		24,093
Total liabilities	515,164		554,106
Commitments and contingencies
Stockholders’ equity:
Convertible preferred stock, $0.001 par value; 100,000,000 shares authorized, zero issued and outstanding at March 31, 2024 and December 31, 2023, respectively	—		—
Common stock, $0.001 par value; 1,000,000,000 shares authorized, 373,295,466 and 372,876,082 issued, 322,826,928 and 322,407,385 outstanding at March 31, 2024 and December 31, 2023, respectively	373		373
Treasury stock, 50,468,538 and 50,468,697 shares at March 31, 2024 and December 31, 2023, respectively	(622,987)		(622,988)
Additional paid-in capital	1,638,964		1,627,491
Accumulated other comprehensive loss	(38,530)		(38,166)
Retained deficit	(224,464)		(193,580)
Total stockholders' equity	753,356		773,130
Total liabilities and stockholders' equity	$	1,268,520	$	1,327,236


	Three Months Ended March 31,
	2024		2023
Revenues	$	248,593	$	307,056
Operating expenses:
Cost of revenues	178,813		209,522
Selling, general and administrative expenses	76,230		86,340
Depreciation and amortization	5,635		5,542
Restructuring	2,115		—
Total operating expenses	262,793		301,404
(Loss) income from operations	(14,200)		5,652
Other (expense) income:
Interest expense	(6,586)		(6,862)
Net realized and unrealized foreign currency (loss) gain	(10,408)		1,185
Other income (expense), net	349		(723)
Total other expense	(16,645)		(6,400)
Loss before income taxes	(30,845)		(748)
Income tax expense	37		7,359
Net loss	$	(30,882)	$	(8,107)

Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments	(364)		242
Comprehensive loss	$	(31,246)	$	(7,865)

Net loss per common share:
Basic loss per common share	$	(0.10)	$	(0.03)
Diluted loss per common share	$	(0.10)	$	(0.03)

Weighted average shares outstanding:
Basic	322,638,110		316,451,601
Diluted	322,638,110		316,451,601


	Common Stock			Treasury			Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Deficit
	Shares	Amount		Shares	Amount								Total
Balance as of December 31, 2022	315,681,987	$	366	50,624,983	$	(624,934)	$	1,565,514	$	(39,210)	$	(123,514)	$	778,222
Net loss	—	—		—	—		—		—		(8,107)		(8,107)
Other comprehensive income	—	—		—	—		—		242		—		242
Issuance of common stock for equity incentive awards, net of withholding taxes	1,189,600	1		—	—		(180)		—		—		(179)
Reissuance of treasury shares for equity incentive awards	12,798	—		(12,798)	159		(159)		—		—		—
Stock-based compensation expense	—	—		—	—		17,679		—		—		17,679
Balance as of March 31, 2023	316,884,385	$	367	50,612,185	$	(624,775)	$	1,582,854	$	(38,968)	$	(131,621)	$	787,857













Balance as of December 31, 2023	322,407,385	$	373	50,468,697	$	(622,988)	$	1,627,491	$	(38,166)	$	(193,580)	$	773,130
Net loss	—	—		—	—		—		—		(30,882)		(30,882)
Other comprehensive loss	—	—		—	—		—		(364)		—		(364)
Issuance of common stock for equity incentive awards, net of withholding taxes	419,384	—		—	—		855		—		—		855
Reissuance of treasury shares for equity incentive awards	159	—		(159)	1		(1)		—		(2)		(2)
Stock-based compensation expense	—	—		—	—		10,619		—		—		10,619
Balance as of March 31, 2024	322,826,928	$	373	50,468,538	$	(622,987)	$	1,638,964	$	(38,530)	$	(224,464)	$	753,356


	Three Months Ended March 31, 2024
Allowance for credit losses, beginning balance	$	(9,550)

Current period provision	(821)
Write-offs charged against allowance	—
Recoveries of amounts previously written off	—
Changes due to exchange rates	380
Allowance for credit losses, ending balance	$	(9,991)


	As of March 31, 2024		As of December 31, 2023
Contract assets included in unbilled receivables	$	28,291	$	29,981
Contract liabilities included in deferred revenue	$	12,138	$	18,090


	Number of Stock Options	Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted- Average Remaining Contractual Term (years)
Balance at December 31, 2023	18,595,731	$	3.76
Granted	—	—
Forfeited	(19,504)	6.24
Exercised	(389,247)	2.40
Cancelled	—	—
Expired	—	—
Balance at March 31, 2024	18,186,980	$	3.76	$	2,978	4.2

Exercisable at March 31, 2024	17,900,258	$	3.66	$	2,978	4.2


	Number of RSUs	Weighted Average Grant Date Fair Value
Unvested balance at December 31, 2023	13,336,829	$	7.96
Granted	15,000	2.47
Forfeited	(495,884)	9.35
Vested (1)	(41,378)	9.78
Unvested balance at March 31, 2024	12,814,567	$	7.89


	Number of PSUs	Weighted Average Grant Date Fair Value
Unvested balance at December 31, 2023	88,132	$	20.11
Granted (1)	1,469,106	2.41
Adjustment for PSUs expected to vest as of current period end	(715,720)	2.35


	Three Months Ended March 31,
	2024		2023

North America (1)	$	88,800	$	115,060
APAC (2)	86,713		97,484
Europe (3)	62,212		78,784
LATAM	10,868		15,728
Total revenues	$	248,593	$	307,056


	Three Months Ended March 31,
	2024		2023
Technology and business services	$	65,369	$	74,133
Energy, public and health services	63,022		84,039
Retail and consumer	38,931		47,912
Financial services and insurance	39,155		55,155
Automotive, travel and transportation	42,116		45,817
Total revenues	$	248,593	$	307,056

SEC Form 10-Q filed by Thoughtworks Holding Inc.