Thoughtworks (TWKS) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $251.7 million, down 12.4% year-over-year, with YTD revenue at $500.3 million, down 15.8%.

• Net loss for Q2 2024 was $36.5 million, with a net loss margin of 14.5%.

• Adjusted EBITDA for Q2 2024 was $5.7 million (2.3% margin), down from $29.3 million (10.2%) in Q2 2023.

• Signed definitive merger agreement for Apax Partners LLP to acquire all outstanding shares at $4.40 per share, expected to close in Q4 2024.

• Restructuring program expanded, targeting $185–$210 million in total savings by October 31, 2024.

Financial highlights

• Gross margin decreased to 27.9% in Q2 2024 from 31.6% in Q2 2023; adjusted gross margin was 30.6%, down from 36.6%.

• Adjusted Net Loss for Q2 2024 was $8.5 million, compared to Adjusted Net Income of $10.1 million in Q2 2023.

• Free cash flow for Q2 was $(21.7) million, compared to $(4.8) million in Q2 2023.

• Cash and cash equivalents were $47.7 million as of June 30, 2024, with $300 million available under the Revolver.

• Total debt outstanding was $291.8 million at quarter end, with an interest rate of 8.1%.

Outlook and guidance

• Restructuring program expected to deliver $185–$210 million in annualized savings, with completion by October 31, 2024.

• Total expected pre-tax restructuring charges are $56.5–$68 million, with $30–$35 million in additional pre-tax cash charges.

• Cost reduction efforts to impact 6–7% of global headcount.

• Management believes existing cash and expected cash flow will meet projected requirements for at least the next twelve months.