TWKS - Earnings call transcript Q3 2021 | Thoughtworks Holding, Inc.

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Unidentified Company Representative

Hello everyone and welcome to Thoughtworks Earnings Call for the Third Quarter 2021.

We will be recording today's call and during the presentations all lines will be on listen-only.

Joining me today will be Thoughtworks President and CEO, Guo Xiao and CFO, Erin Cummins. The earnings press release was issued earlier today and also available on the investor relations page on Thoughtworks.com, if you want to review or download a copy.

Some of the matters we'll discuss on this call, including our expected business outlook are forward-looking and as such are subject to known and unknown risks and uncertainties including but not limited to those factors described in today's press release and discussed in the risk factors section of our registration statement on Form S-1 in connection with our initial public offering and other reports we may file from time to time with the SEC, including our quarterly reports. could on results this uncertainties from differ and expressed those call. risks cause to actual materially These We caution of you these made. forward-looking not to place because made undue they're only as the when statements date reliance on

our which believe measures, During non-GAAP for useful we today, reference will we certain call financial information provide investors. will

reconciliations not our measures to of for Xiao currency growth excluding on the website this performed X-K non-GAAP our rates relations to provide as be is rate conference call. Thoughtworks also which measures measures press businesses Thoughtworks.com. the We information constant currency in to also section as will investor financial revise the our hand earlier obligation no a filed on a GAAP. release financial an update of underlying accordance or with our foreign or over of in substitute the framework GAAP financial We now furnished available today, performance in provided Form for assumes prepared to exhibit superior fluctuations. at include The assessing considered non-GAAP how of our effect should financial to I measures as presented

Guo Xiao

in joined Welcome of $XXX after as million was us Michael. who proceeds was with earnings total to A net on million which going oversubscribed. successful This to you, September first everyone IPO a is our Thank our Thoughtworks. today. company has announcement public XX, $XXX XXXX, raised

in our then on through the our highlights Q&A. you quarter, Given would you then overview financial in and that for we shares of start guidance, results of Erin Erin like to the call we're to open an some more by update giving I before new business the I'll and market, take the you detail. QX Thoughtworks

working. digital an margin quarter to to of with third businesses. you have that We're like in through to a excellence and of increase is of we thought and create delivered a our to start in fostering modern Thoughtworks. At the that quarter, XX%. technology third EBITDA thrive XXXX. result of I'm the of continents. technology September, industry, Thoughtworks The building establishing five enable the digital culture. over today is impact some a introduction design extraordinary in currency. the year-over-year, the I disruptors world Thoughtworker engineering achieved report innovation. best the we an revenue drive reputation the were capabilities culture. technology see a strategy is every Thoughtworkers of countries end pleased just and In constant consultancy thank XX% enterprises we integrates and and year as that of This XX,XXX XX% across XX $XXX strategy And strong for me cultivating for million unique our of journey We around they XX global and Let our leadership,

demonstrate This wide UK Thoughtworks the solutions, work services client important developments will has won transformation products leading of IoT, believe of expanding growth and enterprises, to technology Xapo experience. type our services three Xapo, market. by Fortune learning and businesses relationships, this to coming rapid a spectrum September in up of billion trends premium to FinTech XXXX from was trillion disruptors and to and XXX become journey. According design, key has Through on organizational leading Recently, an business and industry track a engineering, future the Our services have transformation best with see client relationships machine unique of to become existing AI new offering access a regulated growth clients. strong strategy, the with value Thoughtworks cloud, global And diverse clients. existing and clients. digital edge some business Class in believe snapshot expected XX, industry double in customers. combination contracted We're their strong MarketsandMarkets. Xapo telecommunication from that around client. their Thoughtworks software all good has pleased The customer attract growth brand made with services undertaking be and retain partnering shaping culture Telkomsel, deepening breadth company. the a than rapidly growth $XXX accessible driving to capabilities year we has in geographies, of of will XX% large is new We're banking Best around we of This coming our largest Indonesia's margins. models. with in the to transformation expertise acquisitions. be of digital of with on and with enabled to services. financial us across global developing at a capabilities expertise Telkomsel our which of transformation partnered industry, Romania us to This Spending our partnerships and while long lasting across strategic the digital to Bitcoin. talent In from to verticals a from with digital developing XXXX. allowed bring depth slide transforming what These the in mega growing platforms, and to diversified QX, existing excited in We're shows clients, is new driven opportunities more $X won globally the hyper establishing our client by we cutting dollar our impact. clients year-to-date, digital new financial helps have we bank, provider and we to very our derived was strategic we and revenue XX US growth and as technical targeted metrics seeing and our partner with have

the largest investment online in one services Europe. is of Another new client SaxoBank financial is banks SaxoBank.

data teams growth Indian UK Our revenue architecture. SaxoBank We're data governance, data mesh and strong seeing sector. the across public and are in with platforms partnering

and with app web online Kroger leader OptUP And customer in Innovation ecosystem, multi-year core at Main Devices For sunsetting food establish Kroger And more TMR in Architecture last buying and solutions football experience within Driven Kroger existing to support their with impact, that the we their working a Event client, Center business before Roads, collaborating food. effectively. platform technology to Microservices six collaborated Queensland, by app. enables reach finding Once the business those fans, with cost a to faster teams also and Transport around over League based platform, integrated better-for-you customer making informed, make our SaaS healthier of fans. develop with how this purchases evolve National the we're oriented a health global the Lenovo, and services. for Intelligent Football nutritional Football PFF wellness the the And our and we TMR helps won we're keen client mobile customers and America their Group’s Australia amplifying Advanced in standalone have within and OptUP. solutions and for which expanded of OptUP by at example, new North existing Focus, XX have and Pro to engagement information was their experience months, their to partnership simplify Department enrich standalone

on going our thoughtworks.com. of You some details that the these a now successes so I'm can numbers Erin over take hand new section of website she you customer find in greater to can detail. through of to

Erin Cummins

us Thank And for you, you joining Xiao. of today. thanks to all

quarter, our the pleased third very in our company. first results with are We public a as

In quarter. year-over-year growth strong me geographies a and a for XX% XX% third delivered demand currency Let we results few verticals. Revenue services by on begin the the constant outstanding summarizing our across the all highlights quarter, for was basis. of reflecting and

was X% foreign in second was view robust was higher same year. than growth headwind. exchange quarter points quarter XXX margin to EBITDA we X% the XX%, basis after an Third Adjusted of by absorbing the last and quarter increase the compared held a

with and We in leveraging premium margin $XX execution cash of market. focus position free deliver on the million. flow also this We while strong scale our generated results expansion an

me the share details. let Now, some of

revenue quarter. growth in X% acquisitions quarter, to Turning and was contributed completed XX% the XXXX revenue year-over-year the third revenue for in growth January

quarter a We North industry are industry all Europe good at perspective. and at have at XX% XX growing rebound of the than clients. a and year. existing from growing am of with the we Performance business in month at at growing same eight September strong pleased share that at services verticals $XX diversified with XXXX, our third growth time We America XX% greater across our with exceptional at business LATAM regions, of the geographic and XX had XX% million, to increase from around consumer than more clients our XX%. XX%. a and Through also XX% XX%, retail all XX%, came financial I trailing from highly revenues growing now APAC year-to-date growing last across was

Moving the income was year. period the for margin to compared XX% adjusted for last statement, down quarter gross the same XX%

revenue to quarter year margin $X.XX, of solid earnings prior with bill proposition a was XX%, Adjusted adjusted year. quarter SG&A was quarter, the margin charges cash to gross non-cash diluted of in quarter, related XX% our XX% million primarily was the prior EBITDA in XXXX. per the was share XX for loss from due IPO. an the third quarter higher million flow On for third third compared of services basis, impacts in last million, XX Adjusted stock our GAAP for our driven increase adjusted execution for profitability. as $X.XX staffing to up improved share and percentage the an XX% per compared factored reflects premium quarter year, last compared and by basis the the Our was which Adjusted diluted quarter. alongside Free value points of leverage successful quarter to a compared XXX XX strong as operating the $X.XX, third strong rate. driving COVID-XX. EBITDA to compared year Adjusted compensation was to

to We have liquidity. continue strong

XXXX. at balance quarter paid since all strong million balance with a December of down to million, a debt approximately XXX cash XXX very XX XXX September across we leaving Our It have start measures. was million us compared the of at was XXX XX, today. million July, Further, of

focused the are business opportunities, market We our position. while and capturing in premium investing on

to business back our share to Xiao the I like hand additional Now in on updates third to quarter. would

Guo Xiao

Thanks Erin.

start amazing with me Thoughtworkers. our Let

of women or As WUGM. we were of are XXXX, XX.X% minority, gender XX,XXX September XX, Thoughtworkers, underrepresented which

attract We from new the the Thoughtworkers employer the to joiners second for joined Thoughtworks strong through September new X,XXX applicants on the momentum building record in of in and continues us. a the X,XXX market. third when Our quarter, best brand talent XXX,XXX quarter end had

the last value continue the Our months, net proposition overall developing in employee talented and and of highly over we XX growing be with on our differentiated continues XX.X% focus increase Thoughtworkers to people. to

share me Let examples. a couple of

program, as now Thoughtworks Thoughtworkers September third awarded industry for The were cultivating in and culture And countries. trust and our hires Program. in the and graduate on is Based off. level in index XXX,XXX scores year-to-date, first future. We're WUGM. XXXX the achieved The our University Work-Certified has five XX paid in of consultant. purpose Leadership graduates for have XX XX. Founded proud Place XX% Continuing different rounded unique leading leading our we week that the XX% into with graduated employee in of lead were who to Global Great countries program to a and Development XX cohort six onboarding can have XXXX, another a are reaching cohort quarter, with to preparing well means future First, from to empower entry of our on XXX XXXX the their that goal our certification. Place countries leaders integration year values came feedback, This Great Thoughtworks develop and focus around average year-long leaders we live global from Work global industry WUGM. is

and to Our priority impact. is for grow for technologists talented a have Thoughtworks place to be

X.XX. rating the for X.X IT was services much QX, sector global overall Glassdoor of the than higher for Our rating

thought the DNA. our at part the leadership is the outlined start I of industry tech of As and call, revolutionizing

Let to achievements, impact drive in me reason share have with and what the some market. we done

First, let me start radar. with the technology

October can of guidance client our on industry transformations this our in and First out has edition lays a hundreds successful. platforms, digital the and XXXX, published de latest tools, facto to techniques, the in published XXth we that become standard languages, frameworks real on based year, engagements, be in help

platform Lenovo’s to articles digital ambitious we based on Playbook. to that learnings plans how we And with our also our third, I Lenovo, mentioned scale XX Technology Second, work which earlier, to sharing published and the users. platform build million of a active Responsible launched

Playbook and sharper helping society, becomes consequences of world. tools, the technology focus. mitigate more technology, into strive to the talent productive. by frameworks and a of developers where digital methods the of the model risks software be technology industry, it's to In revolutionize comes value unintended advanced ethical the business navigate to to fierce, is we to teams and and world an The increasingly the ethics assess, practices battle the so that and At central removing more As developers make to help technology, more roadblocks businesses Thoughtworks, deliver easier faster. for can their business more essential jobs covers effective

engineers time, internal internal developer about developer to saving NEO. of being passionate a we platform QX, makes called costs, security the faster, easier software went better and the effectiveness. build applications for it in First live with developed. Thoughtworks version It our improving products, of full We're own

And needs. their XXX teams have for application NEO than more used so far, development

portal collaboration Native I'm Next, excited Computing effectiveness an and the have Thoughtworks Foundation. to better with Canadian developer experience leading announced with engineers. and Spotify building developer and also media was Telus called open-source for their world already to have built for deliver worked the we Backstage, improving a deliver company that XXXX Cloud is to Spotify with together developer Simplify communication portals. This that to donated platform developer share Backstage

core global office focus aspect strategy let social unique our to are of It Diversity, has have own people framework. also led impact on practices and the around over Thoughtworks which we works Equity, DEISSC bodies. decade. a for update called is The a the Change, by with projects you our progress been strategy Now, a shares culture with of on supports external with Inclusion, made and Sustainability and our Social Thoughtworks impact, within best me working cultivating ESG office DEISSC. our world, social the many align our on

deep Nations have alignment as United how to our Sustainable chart, can example, Sustainability our create captures impact five directly For service Standards Social In the to where quarter, you STGs the Board. the prioritized as impact local Report, the the third we which Development communities. we in and are resolve rooted technology see Impact on of to social SASB, Goals, well XXXX Accounting using we published problems of inequalities

social continue You Relations our report on do the impact world. can to around find projects Investor a Thoughtworkers site. transformation of

Let me two examples. share

web systems Houston, Texas, with poverty for we’ve in school work administrative platform. the access where to is help thrive. of XXX counselling, and time, XX% PurpleSENSE expand ProUnitas based carry and burden with XX% first Foundation The health begun in students, assistance, Kinder enabled students and PurpleSENSE reduction based schools across a has PurpleSENSE To clubs to of whom services in many to integrates a improvement school mental date, food work. to to response after the

to X million them their over size ever closer the help next work offerings Our of moving goal students will accessible make any years. to XX ProUnitas their school, serving

new to also exploring works London Thoughtworks launched surveillance Technology with of featured MoMA economies. industry, the and the two culture society. explore and Arts themes Lab, New on network is museums. their Global have Research Arts Tate Residencies, York we and impact the our and Arts Thoughtworks Past which emerging from improvisation works Second, Thoughtworks at have technologies artists

Erin Cummins

Thank Xiao. you,

strong contribution of year-over-year we confident year. XXX growth quarter from market. talent remain the of acquisitions and to best to fourth with million This the also our the to this million, demand to constant basis in hire XX% Starting quarter, ability the basis. our of includes expect we guidance, revenues be our points XXX fourth the to expect on Moving we a midpoint in the or currency revenue are XXX XX% of impact two on at reflecting in range

and expect to XX%. margin for XX% QX EBITDA We adjusted be between

Our reflective Christmas. half business days This Diwali informed yearend is of and fourth QX. holiday billable lower is seasonal adjusted quarter in normal now our to are by being and of that number margin example, trends EBITDA investments executed due the timing for a for season, second of the

diluted diluted per approximately to shares in average expect we For the earnings weighted share quarter, of count assuming outstanding. share be to the range fourth of a $X.XX, million $X.XX adjusted XXX

assumption million recorded Stock fourth based approximately a compensation quarter. key result of supports expenses be adjusted a that Finally, the as expected to in to measurements IPO. successful are XX our

year full Now, which expected XX%, for circa growth at to of the a the to of in January constant the XXXX. X.XX revenue XX% year-over-year growth contribution includes we midpoint foreign of reflecting range, an includes basis, at X.XX impact acquisitions favorable the expected year X%. of growth basis XXXX, be expect revenue be billion, On midpoint we XXXX, to the closed for points two of of is from full currency on XXX revenues revenue range in which exchange billion

pleased are which revenue higher full is with very the we than held growth. XX% for growth We revenue year second quarter year view our of the full in expected of XX%,

XXXX year margin held quarter which than and to second for year We adjusted expect is for between higher XX.X% be EBITDA XX.X% full full adjusted of EBITDA view in the margin. we the XX.X%,

We $X.XX, average of be earnings million approximately expect share a XXX full in adjusted diluted range shares year share to count $X.XX per outstanding. weighted to of assuming diluted the

we annual For to will demand growth rates. environment continue support believe the XXXX, strong

of we our contract ago. size are in call. average Our XXXX fourth a from in earnings seeing on quarter guidance value of provide the bookings to plan review are year and a very We February robust increases the client detailed

Now, let me hand back to Michael.

Unidentified Company Representative

Aaron. Thanks,

for a question. follow instructions Operator, to Thoughtworks now many on to possible on website. ask as that each up please Relations you those to participants a provide call? We you as ask the would would to I one allow and our investor the You Investor can move Q&A. on find keep question presentation

Guo Xiao

for give you on the call. those instructions please Operator, could

Operator

first [Operator Instructions] comes Dan Our question Perlin. from

open. line Your is

Dan Perlin

came easy Thanks. start us. kind nature does of quarter? Are as about ’XX? scope terms to and on their the kind Good the just of And first translate work finding of just the morning, box, what talk and I are everyone, clients heading quarter you're great higher this in transformation really your in accelerating it at a you seeing pipeline out the that think that makes the wanted you level how FY plans? congratulations still – that into and a maybe for of about business of

Guo Xiao

transformation Thanks see gen constantly. most a and years, geographies From we and And some to any also geographies We mean, sector then next doing pre-COVID from big years. a to and growth really technology eventually look fast we've continue we or those expect expect rebound all countries, don't and and customer consumer and definitely perspective well. to growth retail do this this perspective, this slowdown financial level, strong to we've in seen in And gradually from and reevaluate believe of do a evolve. Dan. consumer then I all service to normal at see company sector, definitely in through across business coming that public growth like but industry are years. the we the the IT go three pipeline sector. next the spending Thoughtworks, in quick slow expectation, continue then We in to models, continue budget verticals this requires their normal see down more the to all might growth level, coming increased and point digital seen for

So very also infrastructure. And the about AI and we perspective pipeline from cloud especially coming and data, from see growths in service a strong the positive feel future. we

Dan Perlin

investments. Erin, the looks It just quick relation great. based like for up had follow was in you broad pretty in a That's to it quarter. I

your for little year. I'm you kind guidance, called plans providing out XQ, a were over as of investments sure next bit into the into spill So which you

how I those be? So might if what plans you could maybe on specifically Thank of wonder are maybe areas And you. elaborate they then focus. tangible

Erin Cummins

Sure.

largely earlier to our overall the fourth for related quarter the is I on growth So that strategy. investments touched

our So are the we should I invest pretty broad. of what and capability. talents say in our to course, investments And continue is

we talent and focused for talent in Xiao to sessions, that some we client got investments, capability investing we've continuing and our And we in of XX data are have also skill we're in lot our clients mentioned new so a running about then won around portfolio. that QX. the example, And are up QX.

on relationships deepening to our we focus clients. with great on So our while continue bringing clients existing new board

see growth, mentioned. continuing investing Xiao So in ’XX, strong we're in we growth which do

And as acquisitions. then think so quarter, partnership ramping up for And finally, for our for we're And certainly, we then investing also we're a complimentary programs. we opportunities fourth look the to ’XX. continue in strategic about good

it's investment broad the is of range but focused a So strategy. overall on activities that really, growth our really investments, supporting we're

Dan Perlin

very you Congrats. much. thank Great,

Erin Cummins

Thanks Dan.

Operator

next Blair. Our Nolan comes from William with Maggie question

Your line is open.

Maggie Nolan

Thanks and these how give size XX congrats. a develop us the so terms contributing start to curious first you and detail over kind of bit much, you of little clients, then where I'm in service on additional that and relationships to about expecting. new offerings, of time high them growth you're can expect

Guo Xiao

that customer have service over Sure. do the And strategic offerings and offering offering. then point innovate a a from they're into fact acquired look service a thought But and have the that we to we we these main can't the and for The transformation, to cutting apply of build edge starting in have experience relationships. much so qualification we to and with job and enterprise potential monetization us to then kind of happy with done for always the contracts technology time. service one order of will and clients the the not we clients. names XX better operation, we size same, Or the QX, we But their process of help long-term service have name these work leadership. in these and to offerings, build XX Data four acquire clients cloud, that product believe then digital over expand AI reference platform it's most clients start more clients then perspective, we – the other a land tend and they do expand of new

of in expect a fully become top to we XX So number them XXXX. clients

Maggie Nolan

the detail. things, of good And additions and for keep that of on talk some do headcount here you've through you Thanks you side had the to and that things at then this I value current up talent is in attrition How of that your your where are and comfortable employees. kind levels you proposition utilization with environment. mean, competitive at, for it's trending

Erin Cummins

So we are comfortable in and with utilization attrition. trends both the

QX in would a what utilization Our is we consider range. healthy

start the healthy us means may people zone work, bench. For a to which Thoughtworkers on we in many utilization earlier. I touched new have clients beach, talent about, for too capability invest it with don't also the on XX But training talked also to some bandwidth we a we development, refer and the have little which bit to as a continue that our and that means

we've And zone return initiatives our digital healthy normal are attrition. the is the on retention the that from we for in a seeing think then for on us. very programs to this confident within And normalized top based restrictions eased COVID certainly talent it but great highly year, are focused leading I market for we So elevated that top it'll be operating it very first market. healthy is that's certainly trends aware we're several levels. numbers since bound, in seeing and quarter, competitive Thoughtworks would seen attrition. talent, we're our we're normal slightly In range. transformation attrition, utilization in to generally the the We've year and we're so year, if has then And particularly and this earlier at looking of a what consider all opportunities end a that was as the strong. And historical certainly got for toward

it months. three seen reduce In fact, the for month we've past every

do expect comfortable also and we are we really to this well. trend the we've continue. executed level And of general, in So attrition with

received really applications something the QX. of in levels demand We the record mentioned XXX,XXX are employee strong Xiao comes at did than a We few in just that with attrition QX think strong. alone. them. I But is environment. hire more trends the

So QX. and in there's with we're in really good momentum very And general, utilization hiring the comfortable attrition

Maggie Nolan

that Erin. for detail thanks Xiao. Okay, Thanks

Operator

question with Sachs. next Goldman from Our Brian comes Essex

Your line is open.

Charlotte Bedick

How And of is are we in offshore attrition, per Essex. considering markets? talent wage or for – question. and offshore you a are Charlotte Thanks. think on inflation Brian for Bedick work seeing revenue about onshore compared services premium so, Hi, towards should able taking head? moving you near-shore to the and local this to shortage for them Thanks more if maintain demand

Guo Xiao

for the Thanks question.

a So norm. onshore now remote of A bit more lot are deeper data have From This proposition to a premium the doing per then were perspective, year market. perspective, we to of per because offshore trend do. that same revenue clients per time, who person stable from we conversation of value others And is now offerings customer relatively people are the both employee go offshore, a in really to services – be by provide have. the at hesitant used with actually revenue mostly to It’s near-shore, get service demonstrated and a that. we the an and a be building them is offering. first bit helping little and to to clients, context, that they open continue relationship, transform all, our a onshore may importantly, retro new we to and little ratio understanding most our than a component reasonably is offshore just closer site, more to will our seen critical on to kind the of work our and working

perspective, do to challenging work moment, onshore. we it recruit can And talent work of the as a global the we onshore we're able can at we while decrease do pool, and continue we our but to – we talent Employment for portion top that well. believe are moving talent – offer distributed component more dramatically. we're to to don’t expect So leverage glad just not portfolio to I any onshore, maintain of region significant also think, is the

all mentioned, countries investment a across both the at that feel and efforts better Thoughtworks onshore the Erin to offshore. putting is home So we’re all building retention, culture for

teams over onshore about helps. offshore not we're or attrition talent, really teams. for So Hope that worried competition

Charlotte Bedick

a definitely Yes, very maybe follow Erin. guess, Great. for up I helpful,

mix, seeing slightly maybe going forward? expect you gross the margins? are And affecting changing, you changes impacts do With any

Erin Cummins

We are.

to is not margin. seeing significant But shifts any mix slightly gross the our we So changing. are

So we focus that QX on expect maintaining and in a healthy in to we gross margin. saw Certainly QX. see that

no, not have. us that to as about whole, I I we how about onshore QX. and and than But think able to the and and hiring certainly I on say Charlotte. Thoughtworks very maintain that we're in that offshore, and of say it's strong that And because a one has. for the applications great we also shifting number margins much mean I strong we're that we think more would think thing reflecting the talking talents Thanks, QX. I applications I'm maybe brand XXX,XXX had sorry, employer year-to-date stated Still So

Charlotte Bedick

the thanks on congrats Great, question. for earnings. your Thanks. public first And

Operator

Tenzin Our next Wang with Morgan. [ph] from question comes JP

Your line is open.

Unidentified Analyst

congrats on ask Thanks and say first public gross wanted call margin. also well on and as listing. the to I so much

If you don't mind.

delivery in Just those grade how kinds we execution, curious surprises? your of came you pricing just Any you modelled. where contract ahead a costs, I'm little had bit do areas? of

Erin Cummins

No surprises.

great say But can well, start quarter. and I will I add to Okay, quarter want then you the third do was that a in. just certainly

three out, solid driven saw strong last think year. that points pointing is margin by the time I really we gross Tenzin QX, adjusted about was say it execution. than would and in that you're higher was as We same

point overall, in hired revenues of new so in the also and that talk quarter clients. improvements You leverage that then And the view. we from good QX. about to the we our of performance And increase percentage heard also we us very of drove our number Thoughtworkers from record

at So in we happened gross coming thing number a benefit to the bit from were did related little our year-to-date travel XX%. tightened about was some higher expect our that that did was saw countries. expecting. in We COVID that around travel If a countries a some had restrictions. But ultimately, have up we than clients. Tenzin our QX, is excuse more of margin. little on – to bit we what that is me one that look just lower revenues existing we XX% of are QX happen costs And

travel strong had on have with as course. have in third were low We continued you as it we're of bringing quarter drive to client for costs the definitely our a premium But jump quarter. and the – new strong was growth whole, clients really delivery us. clients to well So services, executing been contracts, those Xiao, And board. to able and well want in? client do existing really on at

Guo Xiao

covered the probably this a add just average increase do pricing. There's that. well. to one since contributed want that rate higher it part the our see and you you mentioned We gross I continue year-over-year reason is on think thing fill a of Tenzin, just to to that in I margin.

this I think strong just a is premium reflection this of demand services. digital for good

Unidentified Analyst

than just My behind all the going an we're Is ask, that's later. is an year, is good the M&A going and Make I the stuff. to think? and up. expect you, be do a IPO acquisition rather follow to we sense. turn No, wanted of you with pipeline calendar now that focus sooner maybe to page bigger to appetite would there the there

Guo Xiao

any say we’re who transformation to we the and So made new since small it earlier anyone. opportunities sooner we part we important because decide new value companies near to alignment bigger we to to factors clients our before consider service we capability, our ability all year, done do definitely rushing acquisition proposition, than are markets. acquire further through to be the we going of want acquisitions core business fit to then the XXX for the wouldn't is We two acquisitions, and this term, premium But strengthen get the than later. than can evaluated that, those of complimentary made strategy. and more year-to-date. tuck-ins deals. Even I expect culture haven't be And In more to capabilities, look though

we'll more years. to Hope for the it's us coming or acquisition. right So this to the number in to for look that then fit, continue trying amount a important explore helps. target area But for dollar

Unidentified Analyst

you. Thank does. done. It Well

Guo Xiao

Tenzin. you Thank

Operator

Bryan comes Bergin question with next Cowen. Our from

is line Your open.

Bryan Bergin

to – you. clients. grow about feel you the thank Hi, headroom talk wanted your about larger of I within how some ask to can you

the there? next about base the So in client plans commentary current become they expansion the and I XX your top view, new good year. top clients heard XX about additions, client How can

Guo Xiao

Sure.

portfolio, we their companies top XX clients our current what's have top trying lot if XXX for transform modern digital Fortune the clients are of the the of XX or So strategy? expansion top understand I is, a question clients clients, to the it, top a part are As who end-to-end. into business business

scratching increase So that largest clients. And believe many we're of so we our with our only adjustable the wallet addressable continue surface of with year-over-year. this is share of across Java phenomena, these the enterprise vertical, across spending’s to called clients

increase some we clients. It's growth So far declines. continue a transformation, from some this We revenue see topic in of from the that of urgency, higher we because our digital top our cases, on from clients just put we'll saturated. the are revenue to believe

So of very top them – others. than the to sooner some rise faster the

eight That's example, QX why shuffles million XX the XX XX kind the middle. within this from more TTM XXXX, top revenue of For we with have very clients grown and than to year. so reason over is XX of

Bryan Bergin

just on Can a is where countries Okay, most are on highest where the seeing makes talent? comment then you're follow And competition sense. the headcount or strongest – adding up supply. the which And aggressively? for you you

Erin Cummins

Sure.

definitely are broad we based So growth. seeing

countries. of our we are all hiring – locations. of in near-shore numbers probably of terms we But So most and some the and where will offshore our onshore headcount add some me, of is offshore our excuse in

in we're that So demands Eastern great India, lots seeing of Europe. Brazil,

of It's hiring. so hiring say true So it board. and China and our that but we we're GOs through is can Romania, how across of really we're Spain, really the true it's go in

for that of for I say – talent great a is what talent. has. for competition always Thoughtworks terms would competition or increased And talent, there's In

that increasing the it's see know our experienced as a what out is is so brand don't much definitely we I So as to where past, that employer ever. but strong we than in back get But we've hot there. market

new confident So recruit about our ability to in Thoughtworkers. we're and great really bring feeling

Bryan Bergin

thank Okay, much. very you

Operator

Wedbush Khatri comes from Moshe Securities. question with next Our

is line Your open.

Moshe Khatri

specific – during increases you're the kind a bit when also get peers do year, and morning let We also comp typical Good about increases. seeing one. can do your us very pricing thanks. you your see year, plans ups up follow quarter? pre-pandemic That's Any remind of the Hey, then that for couple some me of a when to looking at And of pricing on of strong we levels. number add A for from maybe you the here. hiring talk any catch And my calendar – heard then quarter. congrats some thoughts maybe ’XX. the here from some

of of lot. to your couple were peers put actually pricing Some this year. through able increases times already a a Thanks

Erin Cummins

will so Okay, I that Moshe. all get

So firstly, starting with the hiring plans XXXX. for

strong up we growth about are strong but And in for gearing Xiao seeing comments this, as So a my earlier, I mentioned definitely already XXXX. for talked we're year.

like And certainly strong across so onshore all will hire board to expect of hiring countries of rates XXXX. offshore. we year, have we've done the this in just And in and our

to. see that great across look what increases then of happen compensation our So is compensation And of in to the increases, in terms forward do we terms year.

have Xiao of we more the probably just QX balance, is out from everything perspective pricing where bit where on so was that our we On increases. a there last a increases revenue one it in happens. quarter in in pandemic, are that back which of have from there's but compensation touched we a So headcount employee. is price then And spread year. QX, lots that just all and is get we've increases And just seen and across little single isn't the price impacted coming seeing increase we really. terms part then increases years, this, normal those good in again, the of of average from per And price part year,

and to it's the services. able premium would expect price get from so And reflecting increases it's just we’re – the in market the

there. trends good So

Moshe Khatri

Thanks.

Operator

Peller next Wolfe from with Darrin Research. Our comes question

open. Your is line

Darrin Peller

nice job. to at but question wanting see talking have obviously pace do the that. One pre-IPO delivering And to balance. you demand, guys, rate. remember great a is to side, high And guys about the certain I you I demand it's Hey, just on you yourself even guys

the can you run really, doesn't too make So machine hot. sure

some potential you've albeit source a so the talent you're so big that and when on right ability we still front, seeing way wage about the And what been smaller think and it's that, of doing to inflation to continue albeit now than number And a the you medium the Can should company, you in something right is of terms if that competitors. the about for touch run we in longer term terms think see rate what of there's through term. rate? or just normalized

Guo Xiao

that. question. take the I'll for Darrin Thanks

for value of growth wanted base, protect our to the then sure we And you're that with proposition, make maintain talent then So right, XX% at base, mentioned, premium quality absolutely the have talent culture careful you Thoughtworks. culture And of and the also to positively. the always the rate rate. as be and and to mostly growing we many evolve we're been plus we years, our have able

phase to new that probably high say we new integration this new of integrate functions experimenting our we without growth to for then This phase, a Thoughtworks premium proposition. as that to I something we're onboarding, and business, growth invest, faster them to careful service have history. – definitely with time seeing is over processes pace is a value where and at faster training premium thanks that But the we're this to feeling about. with the diluting Because other in help help mostly culture have done understand in the organization, of the provider, demand have countries onboard, compared different plus techniques trying them do we have some to growth a haven't have – hires. throughout we at hires, Now, way, all to the a the a seen of business. different we a our we're to XX is be able parts area all into to seen are and What moment, before, we're strong post-COVID. not growth definitely would This faster what year a is faster growth. It's the

believe Now, We all we're can working the on. a pace? we higher given we sustain things can,

that the we careful go so we're going core long back would to engine don't sight that this to also drive this and don't a this We about of too make stretch business. down so. concern lose Now, would because to – of hard We're the over very monitor of culture? the have to time, period sure to come think

to with now right So we'll current phase. continue growth We're not watch it. concerned the

Darrin Peller

up. follow just the one trade-off going use just of think in actual the And guys think capital investments you helpful. we to really M&A versus sort terms about want When the that's organically. about Alright, of of forward and

ideas. with You've having certain that's is think organic just house. really been generally probably has really, been been in leading it in best among the industry done an among known way others, me But I to the innovator, like Thoughtworks the seems innovator

remind about the can you and And in even expect, the strategically, your and to is think forward, going long-term? M&A just we what vision what us near-term so when just

Guo Xiao

clients today main also driver to a a and I'll the only that probably evolving also clients premium to we Sure, the we take been for service do our XX better. ago. But years. provider premium tech’s the there's more and as we that. plan feeling a for we're do has growth capability, want leading Historically, But and use new thought feel and Again, organic driver leadership, than as for then Definitely, who that many in of say we service just firm, that many we’re expectation years generate us, proceeds, have invest as cash M&As. to XX, more pressure us service us today, high into will. terms lot areas flow in for our a the provider, from technology, the emerging more

there to on clients we're on business not pretty to us. technical be data, that to small alignment fit areas, business from And a cloud, culture, machine tuck-ins, the do alignment proposition, continue on. on core this is the more value earlier, I our feel the premium short-term, just the looking in from so strongly we're have asking rely we capability mentioned But believe from will future areas for on will perspective. focusing where is limited we perspective, we this really other a comfortable learning, infrastructure, strategy. build lot we in to many a is And – capability acquisitions our

even the near-term. acquisition our believe really we don't a muscle, or bigger think continue for us we deals to that transformation capabilities So help to need M&A definitely build long-term, In look faster. we we that potentially as we

Darrin Peller

Alright, helpful. you. that's Congrats really Thank guys.

Guo Xiao

you. Thank

Operator

with next Arvind Sandler. comes Ramnani from Our Piper question

Your open. is line

Arvind Ramnani

great the just thanks congrats operational taking from getting a work. had for impact seeing a And I Yeah, back on sort Hi, quarter. to question my on folks question. Are of you're delivery to you seeing work getting how that your from or that or is – and sort back increased even deals. offerings activity how folks is of your selling like changing structuring you're you're

Guo Xiao

Thanks Arvind. good question. a It's

open a So city based I our are on that local for for situation. from of us offices a optional many is our on working we industry, the of the moment every delivery a think of timetable now, really this then lot perspective, not with limited have is out to COVID so country, adapted a even remote at every people. just working kind it's response mean, different All even us to model, the capacity. well, And I office though

we a of who work operating. in to remotely prefers we're continue people a to So where have country lot

believe COVID our relationship overtime, helps. to situation, with social and is hosting for working people work our offices, return key do the own also important in our for building continue. especially that to on getting expect returning the more strongly and to see back hybrid perspective, again, we be a their able in forward. we We requests some on from our regional a together. depends client most cope hybrid go on site situation. moving and work to clients, people people of office definitely to of mode our and to of more events. person Hope this delivery, that Now, this countries, the do with then for between But site from do also with to meetings And And clients, that we people client better will the

Arvind Ramnani

Definitely.

an localized have kind Just quite mean, real a – quick has given changing it's we follow in time. But I we months I in months. XX of last while like as up. Certainly that the been been stable XX guess, environment are things fluid the where as were last

characterize So if now a than share can and you with half demand, bit a ’XX, that have environment not just have demand backdrop now environment, you visibility, as greater the months? looking you you for visibility you look of but And guidance are past more the looking into you greater about a how how of at of I’m year versus the little qualitatively the sort next do year – before? kind XX or demand at more

Guo Xiao

happy it. I'm to color some put on

revenue future. from we generally clients strong accelerate digital as the growth give of – projects. more from with us transformation Erin forward mentioned, coming looking are existing as see great this investment continue more looking from year. first We're new of clients clients and and Obviously, existing and process, visibility to ambitious who a also clients So seeing throughout their XX% both into urgent all, bigger result, to

does to We're some can pipeline? definitely how see translate Now, we use I the that word indicators indicators, forward-looking as seeing early positive this signs.

seeing from a One before. we're of shorter them that initial we cycle is sales pursuit signing, seen contract to papers have

are bookings SOW length today contract, very average in seeing also also the also size, before. of Our seeing and increase the that of SOWs value client We're an robust. than we're longer are average this

say, Hope it. confidence early So that number of without around the kind about question. a us indicators the visibility putting your the answers of more are will pipeline, give these

Arvind Ramnani

the the it and for Yes, you year. does. of very Thank much, good remainder luck

Guo Xiao

you. Thank

Operator

Jason with America. question Bank next Our Kupferberg of from comes

open. is line Your

Unidentified Analyst

Can year some wanted well. growth in maybe costs the the to you're questions, are fiscal term Jason It us IPO in. on through up Hey, think and of And affecting to plus coming congratulations I looks about you full year the full for guys, going for the ’XX? just on follow just of vision that fact this maybe help the and the longer-term Cassie some dynamics kind margin is a adjusted as normalized exit previous XX% year echoing the at margin some EBITDA of the margins. longer of like side. on is

lower maybe well. in so some mentioned than expenses back travel of expected as You that comes

should Thank kind broadly we for think Just now? how of it about you

Erin Cummins

question, Thanks for the Cassie.

that So this performance continue. strong expect mentioned, year to you margin as and delivered we have we

offerings expanding the in and are market. our proposition talent, capabilities. how And our talked and already about we as well we've premium our investing as definitely are resonating services value in Our our

We low also in been of travel see costs do a that year. have margin lot focus mentioned the in gross increases very year-to-date on certainly in travel definitely the XX%. of and coming the And costs, operations. fundamentals we you But our we can XXXX. anticipate And travel in

costs. in to, associated you company. we as that'll base to coming our we business. in expect at those drive put alluded the to time, a operating use So our Especially tech of the both great year. But with on higher capabilities travel And scale our some advantage. so our higher costs are public opportunities we expect also there And continue have to same cost pressure opportunities efficiencies to

in year. to anticipate So we'll we say all our guidance to strong coming continue February be give profit more the but margins specific definitely in to

Unidentified Analyst

so contributed the bit what out outperformance. you just up that? sort Could don't continue called if trend Okay, I to to boost? business? was for retail expect a of maybe a obviously services about And and verticals And helpful. you about quick that's to maybe a little a financial touch little Thanks. M&A I do growth consumer guess vertical bit as outsized and follow guys of these you expectations, drive know more

Guo Xiao

the I is then feel that was And to this In strongly consumer grow even we that We significantly then two believe services, we would the our financial particular sector, we don't by in faster strong. have to in and growth inorganic fast care – public like do contribute look capture COVID. acquisitions services, of consumers. only very that three particular, one expect retail we to also And M&A rebound them public retail sectors consumer given call growth. needs a definitely perspective. specific this have out X% digital don't organically at and the from this energy, those our hit trend continue. will Previously, which these boost ability sectors, of when And kind want post-COVID, from the sustain health was we group together, probably

Unidentified Analyst

Okay, helpful. Thanks. thanks, guys. Very

Guo Xiao

Thank you, Charlotte.

Operator

comes question from Baird. with Dave last Koning Our

is Your open. line

Dave Koning

not. QX, look Hey, I strongest kind Congrats. And my wondering was that of organic is which the at just that the one a longest I Thanks. sequential, or find of that. I'm guys, or anything QX, one to time the QX at look really of in years boosted but about QX when was guess pressure guidance, have. at we just flat we question, across constant up look currency very some item can we And there then Yeah. little we – we just slightly, type QX maybe kind on about creates then when maybe

Erin Cummins

we've touched QX being feeling great So we're from and a how momentum. general you've growth demand quarter, and on about heard the pipeline us the

we continue. expect So to definitely strong growth

Dave, So to for it's question, observe Thoughtworks quarterly to your our business. some seasonality typical in

often a the around vacation higher average. the from our And margin So is public just holidays And taken sometimes time and billable lower. perspective seasonality of days, QX QX yearly than is a them. the function the is

this for and So is really expected. normal us

midpoint we're strong to a add the that certainly I I’ve growth to If we a basis. strong growth but be We the clearly QX, sense for seeing. seasonality. in are range, of seeing But can investments our and growth growth teams we revenue do seeing so at one-time rate, for in mentioned we our on XX% the the growth also and in We're continuing as you QX. we're guidance we that per hire our business. have reflects XXXX. continued some are growth earlier day capacity business to our And the So year-over-year investing at that guided look seeing continued are because in get

year and good as about QX So the on really whole. a feeling whole the

Dave Koning

the quick add first you Thanks numbers of maybe mean, are back lot quarter and up. a to have follow great, than The stock and release. clean press especially in going easy Are comp any forward? certainly getting is gave us add one I other costs. just backs IPO your going companies in you drop which to super

those super be in in small, going QX couple Or or to kind QX. to going were of Are in are Yours past? be million those even I think there anymore? of

Erin Cummins

have is of to stock to amortization, continued numbers. will backs and expect so intangibles – So then What good add we we and have the based going clean compensation course, backs forward. add

Dave Koning

Sounds great. Thank you.

Erin Cummins

you. Thank

Operator

I to any call like questions. the no the back over are further closing There Xiao for remarks. turn

Guo Xiao

call. thanking Thoughtworkers, for for to us we're a and to with impact thank today want particular I extraordinary I partners catch thank closing, everyday Just all like to our for and clients helping us earnings together. then end And for of everyone I finally you joining the all in public first by in our becoming want all look NASDAQ shareholders delivering to company. next forward quarter. up

Operator

Everyone This a does now conclude may program you day. have today's disconnect. and great

Thoughtworks Holding (TWKS) 15 Nov 212021 Q3 Earnings call transcript