Thoughtworks (TWKS) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue was $261.4 million, down 6.7% year-over-year; net loss narrowed to $6.1 million with net loss margin improving to -2.3% from -9.2% in Q3 2023.

• Adjusted EBITDA for Q3 2024 was $30.7 million (11.7% margin), slightly down from $33.6 million (12.0%) in Q3 2023.

• Announced a definitive merger agreement with Apax Funds/Partners to take the company private at $4.40 per share, expected to close in Q4 2024.

• Restructuring program completed in October 2024, targeting $180–$210 million in annualized savings.

Financial highlights

• Nine-month 2024 revenue was $761.7 million, down 12.9% year-over-year.

• Adjusted Net Income for Q3 2024 was $9.7 million, down 16.1% year-over-year.

• Gross margin for Q3 2024 increased to 35.2% from 33.6% in Q3 2023; adjusted gross margin was 37.2%.

• Cash and cash equivalents at quarter-end were $47.0 million, with $300 million available under the revolver.

• Free cash flow for the nine months was $(42.7) million, compared to $30.2 million in 2023.

Outlook and guidance

• Merger with Apax Funds/Partners expected to close in Q4 2024; company will be delisted from Nasdaq upon completion.

• No forward guidance provided due to the pending acquisition.

• Management expects to record an immaterial amount of restructuring expense in Q4 2024 as the program closes.

• Company believes existing liquidity and cash flow from operations are sufficient for at least the next twelve months.