Thoughtworks tops fourth quarter estimates, but stock tumbles 17%+

Thoughtworks tops fourth quarter estimates, but stock tumbles 17%+

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Nasdaq-listed technology consultancy Thoughtworks Holding Inc. topped revenue and earnings per share estimates in the fourth quarter, but its shares nevertheless lost over 17% of their value during today’s trading session.

The selloff may be connected to the company’s pessimistic first quarter outlook. In its earnings report today, Thoughtworks projected a low single-digit revenue decline for the three months through March 31.

Chicago-based Thoughtworks is a major provider of technology consulting services. The company’s services span a variety of use cases ranging from application development to moving on-premises applications to the cloud. Thoughtworks also helps its enterprise clients with less technical tasks, such as creating more effective developer recruiting workflows.

Thoughtworks launched in 1993 and has since grown to more than  12,500 employees. It listed its shares on the Nasdaq in 2021 through an initial public offering that raised $773 million. The company counts major brands such as Atlassian Corp., Porsche AG and Etsy Inc. as customers.

Thoughtworks’ revenue grew 8.3% year-over-year, to $310.7 million, during the fourth quarter, a hair above the Zacks consensus estimate. The company has topped analysts’ revenue projections in each of the past fourth quarters. 

“We are pleased with our performance in the fourth quarter and our clients continue to look to us to help them navigate these uncertain times and tackle their biggest technology challenges,” said Thoughtworks Chief Executive Officer Guo Xiao. “Our revenues were $310.7 million for the fourth quarter, up 8.3% year over year and 14.7% in constant currency, and $1.3 billion for the full year 2022, up 21.1% or 26.8% in constant currency.”

Thoughtworks experienced sales growth across all the regions where it operates. Thoughtworks’ revenue in North America climbed 14.7% year-over-year, while business units at other locations experienced single-digital growth.

When broken down by sector, Thoughtworks’ fourth quarter results paint a more mixed picture. The company’s technology and business services, travel, transportation, energy, public and health services and auto sector revenue segments grew in the fourth quarter. But revenue from customers in the retail, consumer, financial services and  insurance sectors declined slightly on a year-over-year basis. 

Thoughtworks generated a net income of $16.1 million in the fourth quarter, compared with a $16.9 million loss 12 months earlier. That translated into adjusted diluted earnings per share of $0.1. Analysts polled for the Zacks consensus estimate had projected $0.09 per share.

Thoughtworks expects to generate between $303 million and $305 million in revenue this quarter, or 5% to 5.5% less than the same time a year ago. However, the company expects to return to growth during the full fiscal year. Thoughtworks expects to conclude 2023 with year-over-year revenue growth of between 0.5% and 2.5%.

Photo: Thoughtworks

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