Thoughtworks Holding, Inc. (NASDAQ:TWKS) Q2 2023 Earnings Conference Call August 8, 2023 8:00 AM ET

Company Participants

Rob Muller - Global Head of Investor Relations

Xiao Guo - Chief Executive Officer and Director

Erin Cummins - Chief Financial Officer

Conference Call Participants

Tien Huang - JPMorgan

Maggie Nolan - William Blair

Ashwin Shirvaikar - Citi

Bryan Bergin - Cowen

Jason Kupferberg - Bank of America

Moshe Katri - Wedbush Securities

Arvind Ramnani - Piper Sandler

Matthew Roswell - RC

Rob Muller

Hello, everyone, and welcome to Thoughtworks Earnings Call for the Second Quarter of 2023. We will be recording today's call. [Operator Instructions] Joining us today is Thoughtworks President and CEO, Guo Xiao; and CFO, Erin Cummins.

The earnings press release was issued earlier today and is also available on our Investor Relations page at thoughtworks.com. Some of the matters we'll discuss on this call, including our expected business outlook and anticipated costs and benefits of our restructuring actions are forward-looking and, as such, are subject to known and unknown risks and uncertainties. These include, but are not limited to, those factors described in press release and discussed in the Risk Factors section of our annual report on Form 10-K, our quarterly reports on Form 10-Q and other reports we may file with the SEC from time to time.

These risks and uncertainties could cause actual results to differ materially from those expressed on this call. These forward-looking statements are made only as of the date when made. During our call today, we'll reference certain non-GAAP financial measures. We'll also provide growth rates in constant currency as a framework for assessing how our underlying business performed, excluding the effect of foreign currency rate fluctuations. We include non-GAAP to GAAP reconciliations in our press release furnished as an exhibit to our Form 8-K. The non-GAAP financial measures provided should not be considered as a substitute for or superior to the measures of financial performance prepared in accordance with GAAP. Thoughtworks assumes no obligation to update or revise the information presented on this conference call.

I will now hand over to Xiao.

Xiao Guo

Thank you, Rob. Welcome, everyone, to our second quarter earnings call. I would like to start by sharing the overall update on our business, and then Erin will take you through our second quarter results in more detail. Erin will share our guidance, and then we'll open for Q&A. In the second quarter of 2023, we delivered revenue of $287 million with an adjusted EBITDA margin of 10.2%, both of which were below our guidance for the quarter. I want to first discuss the factors that impacted our Q2 results before moving on to the actions we're taking to address our performance going forward. This quarter, we experienced challenges with 3 of our top clients during the second half of Q2, where the scope of work being executed was reduced due to client-specific budgetary decisions or shift in the client's strategic direction. These unforeseen decisions accounted for approximately two third of the revenue mix in the quarter when compared with our guidance. We attribute the remainder of the shortfall to broader macroeconomic factors.