Thoughtworks Holding, Inc. (TWKS)·Q3 2024 Earnings Summary

Executive Summary

• Q3 2024 delivered sequential improvement: revenue rose to $261.4M from $251.7M in Q2, while Adjusted EBITDA margin expanded to 11.7% from 2.3%; GAAP net loss margin improved to (2.3)% from (14.5)% .
• Year-over-year, revenue declined 6.7% with constant-currency down 6.9%; Europe grew modestly (+4.6% YoY) while Financial Services & Insurance and LATAM remained under pressure .
• Bookings momentum improved: TTM bookings increased to $1.3B (from $1.2B in Q2) as the industry-based go-to-market gained traction; restructuring program completed Oct 31 with $180M annualized savings achieved by Sept 30 .
• No Q3 earnings call was held due to the announced take-private; the transaction closed on Nov 13, 2024 at $4.40/share, and the stock was delisted (key catalyst) .

What Went Well and What Went Wrong

What Went Well

• Sequential operating recovery: revenue increased to $261.4M from $251.7M and Adjusted EBITDA margin improved to 11.7% from 2.3% QoQ; net loss margin improved to (2.3)% from (14.5)% .
• Bookings and commercial execution: TTM bookings rose to $1.3B vs $1.2B in Q2, with management citing “continued strong bookings as our industry-based go-to-market strategy is gaining momentum” .
• Cost actions on track: restructuring program completed on Oct 31; $180M annualized savings achieved as of Sept 30 (within total expected $185–$210M), supporting margin expansion in Q3 .

Quote: “The restructuring program was completed on October 31, 2024… As of September 30, 2024, we have achieved $180 million of annualized savings” .

What Went Wrong

• YoY contraction persisted: revenue down 6.7% (constant-currency down 6.9%); Adjusted Gross Margin slightly below prior year (37.2% vs 37.4%) .
• Vertical and regional headwinds: Financial Services & Insurance down 23.3% YoY, LATAM down 16.8% YoY in Q3; North America down 12.5% YoY .
• Cash generation mixed: operating cash flow was $2.1M and free cash flow was negative $(1.1)M in Q3 (vs positive FCF in prior year) .

Financial Results

Core P&L and margins (oldest → newest)

Revenue by geography (Q3 YoY)

Revenue by industry vertical (Q3 YoY)

KPIs and liquidity

Cash flow (Q3)

Non-GAAP notes: Adjusted EPS was $0.03 (vs $0.04 prior year); adjustments included restructuring charges ($22.6M), stock-based compensation ($6.9M), amortization of acquisition-related intangibles ($3.8M), among others .

Guidance Changes

Notes: The company announced a take-private on Aug 5 and canceled Q2’s earnings call; Q3 results also had no call in light of the transaction .

Earnings Call Themes & Trends

Management Commentary

• Strategic execution: “The restructuring program was completed on October 31, 2024… As of September 30, 2024, we have achieved $180 million of annualized savings” .
• Commercial momentum: “continued strong bookings as our industry-based go-to-market strategy is gaining momentum” .
• No earnings call: “In light of the announced transaction, Thoughtworks will not be holding a conference call” .
• Q1 AI focus (context): “We were working on over 50 AI-related projects… acquisition of Watchful… to expedite client AI deployment” .
• Pricing/mix tone (Q1 context): “We don’t expect a significant pricing drop to continue” and offshore mix shifts impacting average bill rates .

Q&A Highlights

• Pricing and mix stabilization: Management expected pricing to stabilize after early-2024 resets; offshore mix depresses average rates but supports utilization and margin .
• Demand/Sequential growth: Confidence in sequential revenue growth tied to stronger bookings and vertical go-to-market execution .
• Margin path: Back-half improvement driven by utilization gains and supply rebalancing toward offshore; no assumed pricing tailwind .
• Vertical GTM impact: Higher win rates and relevance in targeted verticals (energy/public, auto, financials) from domain focus .
• GenAI trajectory: Majority of work still POCs and data readiness; some fine-tuning and own-LLM projects emerging with larger scope expected into late 2024/2025 .

Note: No Q3 call or Q&A was held due to the take-private process .

Estimates Context

• S&P Global consensus estimates for TWKS were unavailable via our data connector (missing CIQ mapping), so we cannot provide a quantitative comparison vs Q3 Street expectations or Q4/FY setups at this time. We attempted to retrieve “Primary EPS Consensus Mean” and “Revenue Consensus Mean” for Q3 2024, Q4 2024, and FY 2024 but the request failed due to missing mapping. Therefore, comparisons vs estimates are not presented [functions.GetEstimates error shown in workflow].

Key Takeaways for Investors

• Q3 showed tangible sequential improvement (revenue and margin) as restructuring savings flowed through and bookings improved; Adjusted EBITDA margin rose to 11.7% from 2.3% QoQ .
• YoY declines narrowed; Europe turned positive YoY, but Financial Services & Insurance and LATAM remained weak, reinforcing the need to lean into geographies/verticals with better momentum .
• The commercial engine is stabilizing/improving: TTM bookings advanced to $1.3B (from $1.2B in Q2), aided by an industry-based go-to-market model .
• Cost actions are largely complete and support profitability: the restructuring program was completed with $180M annualized savings achieved by Sept 30, within a $185–$210M target range .
• Liquidity remains adequate with ~$47M cash and an undrawn $300M revolver; gross debt ~ $290M at quarter-end .
• No forward guidance was provided after the take-private announcement; both the Q2 and Q3 calls were canceled in light of the transaction .
• The public equity catalyst has effectively concluded: the Apax take-private closed on Nov 13, 2024 at $4.40/share, and TWKS was delisted (public investors were cashed out) .